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DEDICATED 

To an order of life in which the chief aim 
will be happy and noble human beings. 



ANTHRACITE 

An Instance of Natural 
Resource Monopoly 



By 
SCOTT NEARING, Ph.D. 

University of Toledo 

Author of 

"Wages in the United States," "Financing the 

Wage Earner's Family," "Reducing the 

Cost of Living," "Income," etc. 



THE JOHN C. WINSTON COMPANY 
Philadelphia 



*&& 



Copyright, 1915, by 
The John C. Winston Company 



JAKi'28 1916 



SUA420563 



SUMMARY 13 

skill and intelligence. Indeed, when the risks 
involved in mining are taken into account, the 
anthracite miner is often worse paid than em- 
ployees doing similar work in other industries. 
Many of the workers in the anthracite field receive 
a wage which will not buy a decent living for a 
family of ordinary size. Furthermore, the wage 
of the miners in recent years has failed to rise as 
rapidly as the cost of living. Consequently the 
income will not go as far now as it did in 1903. 
Certainly the miners are receiving no share of the 
heavy monopoly toll taken from the consumer. 

Chapter 5. The Profits of the Operators 

Meanwhile the owners of the anthracite region 
have been making profits that are generous in the 
extreme. Measured in terms of earnings, of divi- 
dends, or of surpluses, the anthracite interests 
are reaping the full benefits of their monopoly 
control. The prosperity of the anthracite owners 
has been particularly noticeable since the forma- 
tion of the effective combination of 1898. 

Chapter 6. A Concrete Example — The Conflict of 
1912 

The anthracite situation is well illustrated by 
the events surrounding the strike of 1912. The 
workers gained a net increase of about five per cent 
in wages; this raised the labor costs of the coal 
slightly, and the operators promptly added twenty- 
five cents to the price of each ton. The increase in 
wages was used as a pretext to saddle additional 



*lS& 



Copyright, 1915, by 
The John C.Winston Comply 




©JI.A420563 



CONTENTS 

CHAPTER 1 
Monopoly on Trial page 

1. The Nature of Monopoly 17 

2. Anthracite Ownership Means Monopoly . . .21 

3. Monopoly Through Concentration of Ownership . 23 

4. Competition, the Life of Trade 24 

5. The Growth of Co-operation and Combination . . 26 

6. Will Monopoly Work? 29 

7. Ownership as Opportunity 31 

8. The Fruits of Ownership 33 

9. Every System Must Produce Results . . . .36 
10. Has Monopoly Succeeded? 33 

CHAPTER 2 
The Anthracite Problem 

1. The Parties at Interest 42 

2. The Use of Anthracite . . . . . . .43 

3. The Supply of Anthracite 46 

4. The Basis for Anthracite Monopoly .... 49 

5. Unsuccessful Combinations 50 

6. An Effective Anthracite Combination . . .54 

7. Railroad Unity . . . . . . .58 

8. Coal-Mine Control 60 

9. The Anthracite Problem 63 

CHAPTER 3 
The Consumer and Anthracite Prices 

1. The Consumer's Point of View . . ... .65 

2. The Status of the Consumer 66 

3. The Rights of Consumers 69 

4. The Obligations of Consumers 70 

(5) 



CONTENTS 



PAGE 

5. Reasonable Prices 72 

6. Methods of Making Prices 74 

7. Business for Profits 76 

8. Business for Service 79 

9. Prices and Earning Power 82 

10. The Monopoly Principle and Anthracite ... 84 

11. Recent Movements of Anthracite Prices ... 85 

12. The Cost of Producing Anthracite . . . . 87 

13. The Cost of Getting Coal to Market .... 92 

14. A Better Explanation 93 

15. What Should the Consumer Pay for Anthracite? . 94 



CHAPTER 4 
The Wages of the Anthracite Workers 

1. The Economic Status of Anthracite Labor . .97 

2. Anthracite Risks 103 

3. Anthracite Wages and Wages in other Industries . 107 

4. Anthracite Wages and the Labor Market . . .110 

5. The Adequacy of Anthracite Wages . . . .112 

6. The Anthracite Wage Scale 115 

7. The Anthracite Wage and Physical Efficiency . .118 

8. The Anthracite Wage as a Business Proposition . 128 

9. The Anti-Social Nature of the Anthracite Wage . 137 

10. The Anthracite Wage and the Increased Cost of 

Living 141 

11. A Fair Anthracite Wage 152 



CHAPTER 5 
The Profits of the Operators 

1. The Era of Small Profits 153 

2. Making Anthracite Profitable 156 

3. Anthracite Profits and Railroad Profits . . .161 

4. Anthracite Prosperity 167 

5. Are Anthracite Profits too High? . . . .170 



CONTENTS 7 

CHAPTER 6 
Concrete Example — The Conflict of 1912 page 

1. The Apparent Advantage of the Operators . .178 

2. A Typical Situation 181 

3. The Consumer in 1912 184 

4. The Worker in 1912 188 

5. The Operators in 1912 190 

6. Some Lessons From the 1912 Experience . . .194 



CHAPTER 7 
An Object Lesson in Monopoly 

1. The Anthracite Lesson 

2. The Losers and the Gainers from Monopoly 

3. The Larger Menace of Monopoly 

4. The Economic Effects of Monopoly 

5. The Social Effects of Monopoly . 

6. Monopoly Denies Opportunity 

7. The Political Effects of Monopoly 

8. Anthracite and the Government . 

9. The Enemy Within the Gates 



196 
199 
200 
201 
207 
214r 
216 
221 
224 



CHAPTER 8 
The Future of Anthracite 

1. The Conflicting Anthracite Interests 

2. The Coal Owners Would Stand Pat 

3. The Future for the Workers . 

4. The Consumers and the Future . 

5. Winners and Losers 



227 
230 
231 
235 
241 



APPENDIX 

Shipments of Anthracite .... 
Employees, Working Time and Tonnage 



. 243 
. 244 



Index 



245 



PREFACE 

During these years of spectacular military con- 
flict, it is easy to forget the increasing economic 
turmoil that is interwoven with present-day exist- 
ence. Economic issues arise on every hand. 
Capital and labor, wages, the cost of living, 
unemployment — these things are a source j of 
endless social disruption. 

Economic issues may be considered in the 
large. They possess equal potency in individual 
cases, just as the drop of water contains the 
qualities of the ocean. Furthermore, the individ- 
ual instance is more easily studied, its char- 
acteristics are more readily comprehended, and 
the proper method of treatment more safely 
prescribed. Moreover, it is highly probable that 
the deductions which may be drawn from the 
economic conditions surrounding one specific 
problem are in large measure applicable to the 
similar problems elsewhere. 

Some satisfactory method of studying economic 
problems must be devised. Dogma will not stand 
the test of experiment. Preconceptions and 
tradition fall by the wayside. Meanwhile the 
world must know! 

Knowledge is the only weapon that will ever 
overcome the host of difficulties arising out of the 
stress of modern life. Knowledge must therefore 
be the keynote of social endeavor. 

;(9) 



10 PREFACE 

Knowledge must be spread through the land. 
At one time it will be propagated by means of a 
broad hypothesis like that of Darwin or Marx. 
At another, many persons, working each in his 
own field, will produce atoms of information, 
which, aggregated, will constitute the basis for 
still further advance. 

This little book is not a general study. It does 
not aim to set forth any new hypotheses. It aims 
to explain some of the more important phases of 
modern economic life as they apply to one indus- 
try, localized in one corner of one state. It is 
written with the hope that the propositions that 
hold true for the anthracite industry may be 
found to hold, with equal truth, for other natural 
resource monopolies. 



A BRIEF SUMMARY OF THE 
ARGUMENT 

Chapter 1 . Monopoly on Trial 

Monopoly is on trial in the United States. The 
early colonists established a system of property 
ownership under which the natural resources — 
fertile land, timber, minerals, water power, and 
all of the gifts of nature except harbors and 
navigable waterways — might be owned by private 
individuals. Under the system of private owner- 
ship of natural resources most of the valuable 
parts of the earth's surface have passed into the 
hands of a comparatively small number of people. 
The owners, by virtue of their ownership of these 
particularly desirable parts of the earth's surface, 
are enabled to collect returns for the use of their 
properties. 

The system of private ownership of natural 
resources may succeed or it may fail. Its fate 
depends, in the long run, on the effect which it 
has on the well-being of the masses of mankind. 
Three centuries of property relations, under which 
any man who could buy it might place a "no 
trespassing' ' sign upon as much of the earth as he 
could afford to buy, has made a few people the 
owners of the earth. 

Chapter 2. The Anthracite Problem 

The anthracite coal fields present an excellent 
illustration of the ultimate effects of the private 

(ii) 



12 SUMMARY 

ownership of natural resources. The anthracite 
product has a broad, general market; the anthra- 
cite field is limited in extent and localized in one 
small area, the ownership of the field has been 
concentrated in a very few hands. Millions of 
consumers depend upon anthracite for fuel; 
hundreds of thousands of families depend upon the 
industry for a livelihood. The way in which the 
consumers and the workers fare at the hands of 
this private resource monopoly may give many a 
valuable hint regarding the way in which con- 
sumers and workers may expect to fare at the 
hands of other natural resource monopolies. 

Chapter S. The Consumer and Anthracite Prices 

The consumer is called upon to pay a price for 
coal which represents, not the cost of producing 
the coal, but a monopoly price based on the prin- 
ciple of "all that the traffic will bear." The 
monopolist, in other words, charges all that he 
can for his product, his aim being, not low prices 
but high profits. When the cost of producing 
anthracite increases, the consumer is promptly 
saddled with an additional burden. The facts 
show clearly that the consumer of anthracite pays 
all of the costs of production plus a handsome 
monopoly profit to the owners of the resource. 

Chapter 4- The Wages of the Anthracite Workers 

The anthracite workers fare no better than the 
workers in any other large American industry 
giving employment to men of a similar grade of 



SUMMARY 13 

skill and intelligence. Indeed, when the risks 
involved in mining are taken into account, the 
anthracite miner is often worse paid than em- 
ployees doing similar work in other industries. 
Many of the workers in the anthracite field receive 
a wage which will not buy a decent living for a 
family of ordinary size. Furthermore, the wage 
of the miners in recent years has failed to rise as 
rapidly as the cost of living. Consequently the 
income will not go as far now as it did in 1903. 
Certainly the miners are receiving no share of the 
heavy monopoly toll taken from the consumer. 

Chapter 5. The Profits of the Operators 

Meanwhile the owners of the anthracite region 
have been making profits that are generous in the 
extreme. Measured in terms of earnings, of divi- 
dends, or of surpluses, the anthracite interests 
are reaping the full benefits of their monopoly 
control. The prosperity of the anthracite owners 
has been particularly noticeable since the forma- 
tion of the effective combination of 1898. 

Chapter 6. A Concrete Example — The Conflict of 
1912 

The anthracite situation is well illustrated by 
the events surrounding the strike of 1912. The 
workers gained a net increase of about five per cent 
in wages; this raised the labor costs of the coal 
slightly, and the operators promptly added twenty- 
five cents to the price of each ton. The increase in 
wages was used as a pretext to saddle additional 



14 SUMMARY 

burdens on the consumers. The operators made 
millions by the transaction. This situation 
brought out clearly the rule that seems to hold true 
of this natural resource monopoly — the workers* 
gains are slight, the operators' gains are immense 
and the consumers foot the bill. 

Chapter 7. An Object Lesson in Monopoly 

The extra burdens on the consumer, the indif- 
ferent position of the worker and the huge returns 
to those who control the monopoly, seem to 
represent with some degree of accuracy the situa- 
tion that the American people will face with all 
of the natural resource monopolies. The mani- 
fold effects of the anthracite monopoly power 
upon the consumers, the workers, and the eco- 
nomic, social and political organizations of the 
community are due, not to the fact that the 
monopolists control anthracite, but to the fact 
that they have a monopoly. Wherever it appears, 
monopoly leads to certain well-defined ends that 
are evidently in conflict with the best interests 
of society. 

Chapter 8. The Future of Anthracite 

The consumers, the workers and the owners 
have an interest in the anthracite fields. So long 
as the private monopoly of natural resources is 
permitted, the consumers will be called upon to 
foot the bill. Under the present system of natural 
resource ownership they get their fuel at an 
unnecessarily ^ high figure. The worker need 



SUMMARY 15 

expect no better treatment from a monopolized 
industry than he expects from a highly competi- 
tive industry. Indeed, where a monopoly is 
powerful enough to control the political machinery 
as well as the industrial machinery, the worker 
may fare worse under a monopolized than he 
would fare under a competitive industry. The 
real gainers under the present system of private 
monopoly of natural resources are the monopo- 
lists themselves. They have nothing to lose and a 
very great deal to win from the continuance of 
the present system of resource ownership. Of 
the three parties at interest, the monopolists and 
they alone will be benefited economically by a con- 
tinuance of the present system in the anthracite 
coal fields. 



CHAPTER 1 

MONOPOLY ON TRIAL 

1. The Nature of Monopoly 

The owners of the anthracite coal fields are 
monopolists in two senses: First, they are monop- 
olists because they own the coal-bearing land. 
Second, they are monopolists because they have 
concentrated the ownership of the important 
anthracite deposits in a comparatively few hands. 

Economists have agreed to define monopoly as 
a control sufficiently great to fix a price above the 
competitive level. Thus, for example, if five men 
are spinning cotton yarn and selling their product 
in the same market, each one of the men will 
naturally try to out-do the other, either by 
furnishing a superior quality or by selling at a 
lower price. The price of the yarn under this 
free competition will be lowered to a point at 
which the spinner who is producing at the great- 
est cost is getting a return for — 

1. The cost of running the business, 

including raw materials, tools, hous- 
ing and the like. 

2. Wages for himself as a worker. 

3. A fair profit on his investment and for 

the risk which he incurs in carry- 
ing on the business. 

2 (17) 



18 ANTHRACITE 

A price including these items is called a "cost 
price' ' because it represents the actual costs of 
production, including a fair profit. 

Free competition makes cost prices. The 
existence of cost prices is proof of the freedom 
of competition. 

One of the five yarn spinners, who is producing 
more cheaply than his fellows, may decide to 
lower prices. He has certain efficiency devices 
that enable him to do this and at the same time 
to secure a reasonable profit on his business. 
Prices go down, and the four competitors who are 
spinning yarn under greater costs can no longer 
earn profits. If the situation continues, the 
competitors will be forced out of business, since 
prices cannot exist permanently below a figure 
representing the cost of production. 

The five spinners, instead of yielding to the 
pressure of competition, decide to combine in the 
interest of larger profits. One of them is a 
clever business man, who persuades his fellow 
producers to join with him and advance the price 
of yarn 20 per cent. The yarn makers now are 
receiving a return for — 

1. The cost of running the business. 

2. Wages or returns for management. 

3. Profits on the investment. 

4. Monopoly power. 

This fourth element is the result of the agreement 
whereby the producers of yarn advance the price 
above the cost basis. 



ONTRIAL 19 

Monopoly power is the power to establish 
prices above a cost or competitive basis. Any 
advantage that enables a person to do this is a 
monopoly advantage or, as it has recently been 
called, a special privilege. 

Conceived in these terms, the mere ownership 
of a natural resource, limited in amount and sub- 
ject to a demand greater than the supply, is 
tantamount to monopoly, because, since there is 
not enough of the resource to go around, those 
who do hold it are able to charge an extra or 
monopoly price for it. 

Land ownership is perhaps the greatest single 
monopoly with which society must deal. There 
is no sense of the word in which the private owner- 
ship of land is not monopolistic. 

Were there enough land for everyone, and some 
to spare, land ownership would be in no sense a 
monopoly. Other natural gifts like air and sun- 
shine exist in such quantities that all people have 
an ample supply of them. Could air or sunlight 
be privately owned and limited in amount, they 
would afford a monopoly power as great as that of 
land. The owners would be able to collect huge 
profits from those who wished to enjoy air and 
sunshine. The monopoly of air and sunshine 
has proved impossible hitherto. No one has 
yet devised a scheme for fencing them in and 
putting a price on them. 

Land can be fenced in. Unlike air and sun- 
shine, there is no difficulty in fixing the boundaries 
of land ownership. 



20 ANTHRACITE 

Every community in the world, except a newly 
settled wilderness like central Canada today, 
faces the land problem. In every community 
there are more people who want a piece of land 
than there are pieces of land to go around. Hence, 
the mere title to a piece of land enables the owner 
to put a price on it. He may own a sand bar 
near a growing summer resort, or a farm in a 
section which has been tapped by a railroad line. 
He need never have seen the land, much less 
improved it. His ownership gives him monop- 
oly power. 

There is no cost attached to a piece of unim- 
proved land. The owner has done no work 
upon it. He has taken it just as nature gave it. 
Nevertheless, after he becomes the owner, if he 
finds that the land contains some mineral or is 
in some other way desirable, he may secure a 
very high price for the land, because he is the 
owner. 

The monopoly power of land ownership may be 
seen in a growing city. Near the commercial 
center lies a vacant lot. Each year the owner of 
that lot learns, from the assessor's books and from 
the sales of neighboring properties, that his land 
has increased $100 in value. His taxes and the 
interest on his investment are but $50 a year, so 
that the rise in value gives him a clear $50 mon- 
opoly profit. One day a storekeeper offers to rent 
this lot for twenty years and put a store on it. 
The owner consents, and for the granting of that 
privilege, he receives $1,000 a year. From this 



O N T RI AL 21 

$1,000 he deducts interest and taxes. The re- 
mainder is monopoly profits. 

2. Anthracite Ownership Means Monopoly 

All returns which come from land, because of 
its location or because of its natural fertility in 
soil, minerals or other resources, are monopoly 
returns. Much of the return on anthracite coal 
falls in this class. 

The supply of anthracite coal in the United 
States is very limited. The demand for it is wide- 
spread. The owner of anthracite coal land can 
set a price that will represent the difference 
between competitive conditions and the consoli- 
dated ownership of the anthracite coal field. 

So absolute is the monopoly power that is 
inherent in the ownership of a natural resource, 
limited in supply, that the owner of a piece of 
anthracite coal land may receive, for his bare 
ownership, a price in proportion to the amount 
of coal that his land contains. This is true with- 
out any reference to the conditions under which 
the land was obtained. 

Thus, for example, a man has gone into the 
mountains and bought a tract of cleared land. 
The timber has been cut off; the hills are rugged 
and precipitous; the valleys narrow and unfer- 
tile. Some day the land will be reforested. Mean- 
while it lies fallow, a prey to the periodic forest 
fires that sweep off the undergrowth and prevent 
the development of a good growth of timber. 
This land sells for 20 cents an acre. 



22 ANTHRACITE 

The owner feels that he has a bargain — $1,000 
for 5,000 acres of land. He builds a hunting lodge, 
posts "No trespassing' ' signs, and spends a few 
days winter and summer hunting and fishing. To 
him the land would have been cheap at twice the 
price. 

A geologist, in making a survey of the region, 
discovers anthracite on the tract. There are two 
veins — one thick and fine; the other thin and 
poor. They are both workable, however. 

The nearest railroad is four miles from the 5,000 
acre tract. The land has not changed in its make- 
up for a million years, and yet, no sooner is the 
discovery of this coal made known than the owner 
of the hunting lodge is asking $100 an acre for 
land that was cheap at 20 cents only yesterday. 

What is the explanation? Under this land 
there lies a vein of coal. People want it. They 
are willing to pay well for it, and the land owner, 
because he is the owner, is able to sell for $500,000 
a tract that cost him $1,000. The difference in 
value represents the monopoly power that at- 
taches to the ownership of a resource, limited in 
amount|and generally desired by the community. 

The owner of the 5,000 acre tract may decide 
not to sell his land. Instead, he may make a stip- 
ulation that for each ton of coal dug from the 
mine he is to receive 10 cents. From that time 
on, and as long as the property is producing coal, 
this owner of 20-cent hunting lands will be receiv- 
ing an income greater or less in proportion to the 
amount of coal mined, so long as the property is 



ON TRIAL 23 

productive. This royalty privilege is another 
phase of the monopoly power of ownership. 

The owner, for no reason other than his owner- 
ship, is able to share in the products of the land 
to which he holds title. 

The point is emphasized because of its pro- 
found significance. In all economic discussions 
the place of ownership must be clearly understood. 
Wherever there are two pieces of land wanted by 
three men, the owner of each piece of land will be 
able to put a price on his piece. 

Anthracite coal land falls in this monopoly 
class. There are only a few acres of such land. 
These few acres are wanted by a large number of 
people. The excess of demand over supply en- 
ables the owners of the anthracite coal land to set 
a price on it and receive a monopoly return for 
their ownership. 

3. Monopoly through Concentration of Ownership 

Anthracite land owners have monopoly power 
because they own the anthracite land. They 
have clinched this monopoly power by concen- 
trating the ownership of the many acres of anthra- 
cite land in the hands of a very few people. 1 

The continent is so arranged geologically that 
for every acre of anthracite land there are 4,000,- 
000 acres of land that do not contain anthra- 
cite. This geologic fact places great monopoly 
power in the hands of every anthracite owner. 
Add to th is the successful business ventures that 

1 A statement of the extent of this monopoly will be found in Chapter 2. 



24 ANTHRACITE 

have culminated in the concentration of the an- 
thracite acres under the control of a very small 
group of interests, and the monopoly picture is 
complete. 

The fact that there is only one acre of anthracite 
land for each 4,000,000 acres of other land means 
that the chances for competition are compara- 
tively small. Concentrate the ownership of all 
the anthracite acres in a few hands, and the possi- 
bility of competition vanishes. 

4- Competition, the Life of Trade 

At this point the reader will infer very readily 
that the complete monopoly of a natural resource 
is bad. But is it ? 

The people of the United States are very eager 
to conclude that a thing is either "good" or 
"bad." In the case of monopoly, they have 
been even more than anxious to attach words of 
opprobrium and reproach to any business organi- 
zation which displayed monopoly characteristics. 
A long line of anti-trust statutes which have been 
passed during thirty years furnish abundant evi- 
dence of the popular conviction that the trust 
was "bad" and "wrong." Farmers and small 
business men united their influences, and state 
and national legislatures alike loaded the statute 
books with laws directed against certain forms of 
monopoly power. 

The trust was fought from all angles. Rival 
businesses were organized. There was, on the one 
hand, the trust ; on the other hand, the anti-trust 



Oi^ TRIAL 25 

organization, which in its turn became virtually 
a trust. Yet, strangely enough, a certain amount 
of public approval attached to the anti-trust trust 
because it was in a position of opposition to the 
original trust. Both might be, and probably 
were, charging similar prices. Both organiza- 
tions might be reaping huge returns through their 
ownership of natural resources, patents or other 
special privileges. Yet the mere fact that the 
first organization represented the trust, while the 
second organization opposed it, gave some color 
to the demand of the second organization for 
public confidence and patronage. 

The opposition to the trust was founded on the 
axiom that competition is the life of trade. The 
phrase is an old one. In the eighteenth century 
it was revived and given widespread currency by 
the Physiocrats and their followers. 

The axiom that ' ' competition is the life of trade ' ' 
was accepted as the great and universal law of the 
economic world. Economists promulgated it and 
business men did their best to live up to it. For 
generations competition was venerated with a 
childlike confidence by the commercial intelligence 
of the Western World. 

Finally a change came. Experience is an effect- 
ive teacher. Men learned by degrees that com- 
petition did not pay. Producers waged cut-throat 
wars with one another, until experience taught 
them two things : First, competition may ruin the 
successful as well as the unsuccessful competitor. 
Second, whoever won, the consumer, and not the 



26 ANTHRACITE 

producer, derived the benefits under the com- 
petitive regime. 

Experience finally convinced the business world 
that competition was dangerous in the extreme — 
almost as dangerous to the successful as to the 
unsuccessful competitor. Many a successful 
man, at the end of a price war, has gazed around 
him at the havoc wrought by the struggle, has 
estimated the cost in health and effort, and has 
then wondered whether, after all, it really paid. 
Certainly it did not pay, in business returns, 
even for him. It had ruined the man who lost. 

The consumer liked competition because it did 
pay. A price war meant cheap goods. Com- 
petition spelled plenty for the housewife. There- 
fore the consuming public was an ardent supporter 
of the competitive regime. 

5. The Growth of Co-operation and Combination 

The manifold experiences of business triumphs 
and failures combined with a number of other 
factors to convince the producer that while com- 
petition might be the life of low prices, it was the 
death of profits. He sat down with a fellow 
manufacturer at a quiet luncheon and whispered 
this idea to him across the table. The other 
nodded intelligently. He, too, had reached the 
same conclusion, though he had never dared to 
breathe a word concerning it. The little luncheon 
gave place to a larger one, out of which grew a 
manufacturers' association, a gentlemen's agree- 
ment, a trust or a combination. The idea spread 



ONTRIAL 27 

like wildfire and producers began to take care of 
themselves through the sure channels of trade 
co-operation and organization. 

The different forms of co-operation were vari- 
ously effective. The association with its dinners 
and conventions gave men in the same line of 
business a chance to form speaking acquaintances 
with each other. The gentlemen's agreement 
bound producers loosely together. They agreed 
to fix prices ; to sell only certain lines of goods ; to 
sell only within a certain territory or only under 
certain conditions. The gentlemen's agreement 
was unenforceable at law, but the erstwhile com- 
petitors had seen a great light. They realized 
the superiority of co-operation over competition 
and kept well in line. 

The trust and the combination were formal and 
legal. Great funds of capital were aggregated 
under the direction of one group of men. Entire 
industries were brought under the control of one 
corporation. Even though there was no mon- 
opoly in theory, there was no longer active 
competition in practice. Thus, through a series 
of " get-together' ' devices, the era of competition 
gave place to the era of co-operation and com- 
bination. 

With the cessation of competition, the con- 
sumers came face to face with the pressing nec- 
essity of taking care of themselves. Prices were 
no longer fixed on a competitive basis. Some 
prices rose mightily. Others failed to decrease 
in proportion to the greater efficiency of produc- 



28 ANTHRACITE 

tion. The consumers had depended for price 
regulation on a competitive war between pro- 
ducers, and the producers had declared a more 
or less permanent peace. 

The transition from competition to combina- 
tion led to a new definition of monopoly profits. 
They could be estimated no longer on the basis 
of a competitive price level, because there was no 
competitive price level. Some substitute for the 
competitive price level was necessary. The one 
most easy to apply was the "cost of production.' ' 
Therefore, at the present time a monopoly profit 
is defined as a profit in excess of a fair return on 
the actual costs of conducting the business. 

The difference between a competitive price 
level and a cost price level is theoretically very 
small. Competitors were supposed, by their 
competition, to reduce prices to a point where 
they yielded only a fair or reasonable profit. 
Those who advocate the fixing of prices on the 
basis of cost insist that the theory behind com- 
petition be made the basis for regulation. When- 
ever a price is maintained at a point that yields 
more than a fair return in the actual cost of con- 
ducting a business, then a monopoly profit exists. 
This definition does not allow a business to first 
capitalize its earnings and then allege the charges 
on this capitalization as one of the costs of its 
business. Cost prices are figured on the physical 
valuation or cost of replacement of the physical 
property of the business. 

Whatever their form, industries which exact 



O N T R I A L 29 

more than a fair profit on the cost of production 
are in possession of monopoly advantage. Where- 
ever monopoly power is being exercised there is an 
opportunity for a reduction of the cost of living 
through a reduction of monopoly prices to a 
cost level. 

6. Will Monopoly Work? 

Whatever may be the theory regarding the 
desirability of competition and the menace of 
monopoly, the fact is that the business world is 
being rapidly transformed from a competitive to 
a co-operative basis. Though this co-operation 
does not always involve monopoly, it does involve 
a considerable decrease in the amount of free 
competition. 

Furthermore, in a scientific age men are not 
content to accept any dogmatic formula without 
inquiring into its validity. Our forefathers said, 
1 ' Competition is the life of trade. ' ' Their descend- 
ants added, "Monopoly is a public menace/ ' 
The students of the present generation, surveying 
the competitive regime of the early nineteenth 
century and the monopolistic regime of the late 
nineteenth century, may well ask a different kind 
of a question. Monopoly is not a matter of 
figures, but of economics. It is neither good nor 
bad. The sole question that must be raised in 
regard to monopoly is its practicability or 
its impracticability. In short, "Will monopoly 
work?" 

In 1850, before any man had witnessed the 



30 ANTHRACITE 

remarkable industrial developments of the last 
forty years, the ordinary student, as well as the 
ordinary business man, would have said unre- 
servedly that competition is a good thing. He 
might have added, "It is a good thing because it 
works." The experiences of the later nineteenth 
century showed that however good a thing com- 
petition might be, there was a better thing, 
namely, co-operation. The business world did 
not work this statement out theoretically. It 
had tried competition. It had grown accustomed 
to competition. With this background of expe- 
rience, the business world experimented with 
co-operation. The latter form of organization 
appeared more advantageous than the former, 
and the business world cried: "Competition is 
dead — -long live co-operation and combination." 

There is no chance that this generation will go 
back to the competitive regime of the early nine- 
teenth century. Society never goes back. There 
is a question, however, as to whether the present 
generation will continue the monopoly regime of 
the early twentieth century. The answer to that 
question depends entirely upon the effectiveness 
or ineffectiveness of monopoly. 

What has happened where monopoly has been 
tried? How has monopoly succeeded? Or 
better still, Will the monopoly of natural re- 
sources accomplish what it was intended to 
accomplish? Upon the answers to these and 
like questions must depend the fate of our sys- 
tem of privately monopolized natural resources. 



O N T RI A L 31 

7. Ownership as Opportunity 

Our forefathers thought that ownership would 
lead to opportunity. They failed to see in it the 
seeds of monopoly. 

The early colonists accepted a system of private 
ownership of natural resources. They had fled 
from the tyranny of landlord-dominated Europe, 
with an abiding dread in their hearts of the 
oppression which grew out of a concentration of 
wealth control in the hands of a small ruling class. 
They had lived for generations in or near Euro- 
pean countries which were suffering from the 
burden of a landed aristocracy which was able to 
exercise formidable power over all of the institu- 
tions of society. 

These early colonists enunciated the principle 
of equal opportunity religiously and politically, 
because the weight of feudal oppression had been 
felt in church and state. At that time there was 
no clear idea abroad regarding the importance of 
the economic forces behind church and state. 
They, in themselves, were looked upon as the 
cause of oppression, and the early settlers declared 
their liberation from both. Men in the new 
world were to be free and were to have equal 
opportunity. 

There were instances in which the colonists 
denied equal rights. New Amsterdam attempted 
the Patroon system, under which the ownership 
of the soil should continue in the hands of a 
select landlord class. Other colonies were fur- 
nishing land free to settlers, and were even giving 



32 ANTHRACITE 

bounties in the form of tools and livestock to any 
one who was willing to take land and cultivate it. 
The competition was irresistible, and New Amster- 
dam was ultimately forced to do as the other 
colonies did and allow free opportunities in the 
use of the earth. 

The argument underlying the free use of 
natural resources was simple and, from the view- 
point of those times, irresistible. The men and 
women who founded the colonies had left the 
despot-ridden countries of the Old World, seeking 
a place where they might think and believe, free 
from oppression. Their experience told them that 
landlordism and despotism meant the same thing. 
They had been brought up in countries where 
practically all of the desirable pieces of the earth 
were owned by a small class and were handed 
down from generation to generation in the same 
families. The rest of the human race must work 
for and pay tribute to these land-owners. Feudal- 
ism was built on this assumption. The duties 
which the feudal baron owed to his tenants fell 
into disuse; the rents which the tenant paid to 
the feudal baron were transmuted from rents in 
kind to rents in money, and the peasant was 
compelled to surrender a great portion of the 
products of his toil in return for the right to live 
on the earth. 

In the days of the English Commonwealth, 
under Cromwell, the Digger Movement gathered 
its strength. The people who had been driven 
off from the common land as it was enclosed by 



ONTRIAL 33 

the great land-owners, reasserted their right, but 
without avail, to a use of part of the earth's 
surface. Everywhere throughout Europe the 
belief held sway that God had intended the earth 
for the few, and that the many must pay tribute 
for the right to a foothold in their fatherland. 

The remedy for landlord despotism clearly lay 
in the direction of individual ownership. "Give a 
man the possession of a barren rock," cried one 
of the champions of this movement, "and he will 
convert it into a garden." Acting upon this 
theory, the early American colonies granted to a 
man and his heirs forever the possession of those 
pieces of land for which he could secure clear 
title. 

This plan of individually owned natural re- 
sources succeeded admirably in a new country. 
For every tree that was pre-empted, a score stood 
waiting for the next claimant; for every acre of 
land that had been claimed, there were a hundred 
still untilled and unsowed. The hills abounded 
in wealth, the streams were full of power. In the 
early days the forest, the rivers and the sea 
yielded a bountiful supply of wild animals which 
provided food and clothing. All of these things 
might be had for the taking, and to no one might 
they be denied, because each man could get them 
for himself. 

8. The Fruits of Ownership 

This generation realizes with difficulty the 
meaning of a frontier. In colonial days the man 

3 



34 ANTHRACITE 

who was disgusted or discouraged stepped to the 
edge of civilization. He fed, clothed and out- 
fitted himself — not at public expense, but at 
nature's expense. 

Today, the United States is bounded by the 
oceans and by Mexico and Canada. There is no 
frontier — no "free for ail." America is living a 
new life. 

With the ending of the nineteenth century the 
free land in the United States vanished. Long 
before that time the best of the natural resources — 
timber, minerals, water-power and fertile agri- 
cultural land — had been labeled "mine" by a 
relatively small group of powerful industrial and 
financial interests. The ownership of agricul- 
tural land was still widely scattered. The owner- 
ship of the more important timber and mineral 
resources was being rapidly concentrated. 

What will be the result of this private owner- 
ship of natural resources? The time has come 
when that question must be faced and analyzed 
scientifically. 

While resources were free for the asking, no 
man could put a price upon them and demand 
to be paid because of his land ownership. The 
moment that free land disappears, land owner- 
ship commands a monopoly price. In the centers 
of trade and industry this monopoly power is 
enormous. Where it is exercised over very rich 
resources, like coal lands or timber lands, the 
monopoly power of private ownership is likewise 
very great. Consequently, immense prices are 



ON TRIAL 35 

paid for pieces of land that a short time ago were 
practically valueless. Thus the hard, unyielding 
rock soil of Manhattan, all of which was sold by 
the Indians for a few dollars, is now valued in 
places at upwards of $40,000,000 an acre. This 
immense valuation is the result of the presence of 
population, of trade and of industry. The owner 
of the land need have done nothing in the way of 
improvement. 

The land upon which the City of Boston stands 
was valued at $366,000,000 in 1890, and at $672,- 
000,000 in 1910. The interval of twenty years 
resulted in a doubling of these land values. The 
farm land of the United States was worth $13,- 
000,000,000 in 1900 and $28,000,000,000 in 1910. 
During the same period the value of farm land in 
Illinois rose from $1,500,000,000 to $3,000,000,000; 
in Iowa from $1,250,000,000 to $2,750,000,000; 
in Kansas, from $1,000,000,000 to $1,500,000,000. 
The fact that the land is limited in amount, and 
is in great demand, is sufficient to place upon it 
a high monopoly price. 

The private ownership of natural resources was 
a scheme that was devised to stimulate thrift, 
energy and ambition. It was intended to give an 
opportunity for life, liberty and the pursuit of 
happiness. 

When the principle of individual ownership was 
first resorted to the United States was a wilder- 
ness. Resources existed for all, and in abundance. 
Since that time free land has disappeared. The 
whole economic foundation of life has been revo- 



36 ANTHRACITE 

lutionized. There is no more free land and the 
frontier has disappeared. 

Each change in economic conditions gives rise 
to new needs and new relations. Social forms 
are modified because the basis for life is altered. 
Two generations ago the country's adjustment to 
life included a safety valve in the form of a fron- 
tier. The frontier meant cheap grazing land, 
free agricultural land, free timber and free miner- 
als. Today each first-class piece of land in the 
United|States has its price. 

Sooner or later the American public must decide 
whether a system of private property in natural 
resources can work advantageously after free land 
disappears. Up to the point where land ownership 
carried with it no monopoly power, many legiti- 
mate justifications could be urged in its favor. 
Now that private property in land almost inevi- 
tably carries with it the power to lay a monopoly 
tax upon the industry of the community, the 
situation takes on a very different aspect. 

9. Every System Must Produce Results 

The system of private ownership of natural 
resources, like any other social institution, must 
be able to stand trial. Each social institution is 
a device adopted by society to accomplish certain 
results. The bow and arrow is a means of secur- 
ing game. The family is a means of protecting 
offspring. One is an individual weapon, the 
other is a social institution. Each has a purpose. 

The bow and arrow is adopted because it is 



ONTRIAL 37 

more desirable as a weapon than anything that 
preceded it. Neither the club nor the flint- 
headed spear is effective as compared with the 
bow and arrow. Once the bow and arrow is 
devised, it is used until some better weapon is 
discovered. The moment, however, that the 
better weapon appears it automatically replaces 
the bow and arrow. 

The individual adopts the methods best calcu- 
lated to insure the success of the things he wishes 
to do. His test of the effectiveness of a given 
means is the results which it accomplishes. 

Society, in this respect, differs in no way from 
the individual. There are certain ends which 
society aims to accomplish. To attain those ends, 
men devise social institutions or social methods, 
as they might be called, such as the family, the 
state, private property in natural resources. So 
long as these institutions achieve the results for 
which they were established, they may hope to 
perpetuate themselves. If they fail in any par- 
ticular to accomplish these results, they are 
attacked and ultimately demolished. In their 
places rise new institutions, better calculated to 
do society's work. 

There is no law of society more inexorable 
than that which involves the survival of the 
fittest social institution. Given two ways of 
running an educational system, one less advan- 
tageous and the other more advantageous, to 
securing the results at which society is aiming, 
the more advantageous method must ultimately 



38 ANTHRACITE 

triumph, because men, individually and socially, 
necessarily choose the things they believe to be 
to their greatest advantage. 

10. Has Monopoly Succeeded? 

The present system of monopoly in natural 
resources was devised to stimulate ambition, 
thrift and initiative. It was aimed to inspire 
men to put forth greater effort in order to avail 
themselves of the greater opportunities. At a 
time when there were more farms than men 
seeking farms, the private ownership of farm land 
did stimulate and energize. That day has passed, 
however. At the present time there are many 
individuals who would like to hold possession of 
every desirable resource in the United States. 
Therefore, the owners of these resources put a 
monopoly price on them and secure a return based 
on their resource ownership. 

Another thing has happened which was not 
generally foreseen. The argument in favor of 
natural resource monopoly was based on the 
supposition that each man would take a piece of 
land large enough for him to cultivate, and that 
upon this land he would expend his own energies. 
Two things have intervened to prevent the reali- 
zation of this hope. First of all, men took more 
land than they could use and held it for an 
increase in value. In the second place, successive 
generations have concentrated land ownership to 
a greater and greater degree. 

So long as there were more farms than men, 



ONTRIAL 39 

it was difficult to get labor. Why should you 
till my land and reap my crops when for the 
asking you could get a farm of your own on 
which to expend your energies? 

Today there are more men than farms. Those 
who do not own farms, in order to live, must 
work for those who do. Consequently, the 
owners, instead of expending their own energy 
in the work of production devise means whereby 
they permit others to use their property and to 
give them, in return for this use, an income upon 
which they may live without themselves expend- 
ing energy. 

There is a second but equally important point. 
A few people have secured possession of all of 
the valuable resources. Herbert Spencer, in the 
now famous ninth chapter of his "Social Statics,' ' 
pointed out the inevitable logic of a system of 
private ownership in natural resources. One 
man, he explains, may own land to the exclusion 
of everyone else. There is no limit to the amount 
of land which any one man may own. There- 
fore, it is perfectly conceivable that one person 
should obtain possession of an entire township, 
county, state or nation, whereupon all other 
people would be trespassers and might remain 
only while they did the bidding of the man who 
owned the property. 

Of course, the time when one man might own 
the United States is very far distant. Even 
today, however, most of the rich resources are 
in the hands of a very few people, who exercise 



40 ANTHRACITE 

their right of ownership to exclude all others 
from the use of these resources until they, the 
owners, are ready to develop them. 

It is now manifest that the ownership of the 
important resources — the choice bits of land — is 
concentrated in the hands of a very few people. 
The incentive is taken away from a great majority 
of people because the essence of the argument 
in favor of private ownership of resources was 
that the ownership would stimulate the owner. 
As a matter of fact, the owners of the great 
resources are not stimulated to do anything except 
to get other people to work for them upon their 
resources. In return for this concession, they 
secure a royalty or rent based on the resource 
value. 

There is another angle from which the matter 
must be considered. Children are being born 
into the world every day. From the standpoint 
of ownership, what situation do the children face 
who are born at the present time? 

Children now come into a world in which all 
of the "corner lots' ' are pre-empted. Most of 
the desirable property which is not in the hands 
of the government is labeled "mine" by some 
private holder. What chance has the prospective 
worker as against these owners? Merely this 
chance — unless his ancestors through their accu- 
mulations can constitute him an owner, he must 
work for the owners on their property until he 
has accumulated enough property to be an owner 
in his turn. In other words, the method of 



O N T R I A L 41 

private ownership in natural resources automat- 
ically excludes the new-born citizen from the 
use of those resources except on the terms — the 
monopoly terms — which the owners prescribe. 

There is a broader point of view from which 
the matter may be analyzed. No social scheme 
can succeed unless it makes men well and happy. 
Any social system which produces a surplus of 
unhappiness is doomed to dissolution. 

Even where a social system is well established, 
if any other plausible scheme promises greater 
health and happiness than the one in vogue, or 
if the proposed scheme grants happiness to a 
larger number of people than the one in vogue, 
it will ultimately be tried, and if it succeeds, 
it will replace the established order. 

There is no necessity for people to adjust 
themselves to the conditions of monopoly. Mon- 
opoly is not a standard to which men must con- 
form. It is a method of obtaining social results. 
If it achieves these results, it will be retained as 
a social institution. If it fails to achieve these 
results, it will be condemned and replaced by 
some social institution that appears to be ulti- 
mately more advantageous. Monopoly must be 
adjusted to human needs. Monopoly must result 
in health and happiness. Unless it does these 
things, it cannot hope to endure. 



CHAPTER 2 

THE ANTHRACITE PROBLEM 

1. The Parties at Interest 

The situation that has prevailed in the anthra- 
cite regions during the past dozen years gives a 
vivid idea of the conflicts that must precede any 
solution of the issues that are raised by the pri- 
vate ownership of natural resources. The anthra- 
cite situation has been the object of investigation 
by the Federal as well as of the State govern- 
ment of Pennsylvania. Charges have been heaped 
upon charges, suits have been instituted and 
appeals taken. The phials of public wrath have 
been poured out liberally through various govern- 
mental and journalistic channels upon the vexing 
questions which the anthracite problem has 
brought to the fore. 

The public is not alone in its impeachment of 
the anthracite situation. The mine workers like- 
wise have played a part, and at times a very 
energetic one, in the assaults upon the coal mine 
owners. Labor disturbances have followed one 
another in rapid succession. At times they have 
been settled by means of a peaceable agreement; 
at other times they have resulted in prolonged, 
bitter strikes. Since 1898 the labor situation in 
the anthracite regions has never dropped far below 
the boiling point. 

(42) 



THE PROBLEM 43 

The public has vented its wrath. The workers 
have made their protest. Consumers and work- 
ers alike cry their anathemas against the exactions 
of the operators. 

In striking contrast to the dissatisfaction dis- 
played by the public and by the mine workers is 
the spirit of contentment evinced by the coal 
operators and the coal-carrying railroads. These 
parties at interest seem to have no cause for com- 
plaint, and they display no desire to alter the 
present status of the industry. 

Each monopoly of natural resources by private 
capital leads to a controversy between the same 
parties. The consumer, the worker and the oper- 
ator or owner of the resource, each represent a 
viewpoint. Thus far in the anthracite field, 
the operators are the only parties at interest 
who are convinced that things should be left as 
they are. 

2. The Use of Anthracite 

Anthracite is a concentrated, monopolized nat- 
ural resource upon which tens of millions depend 
for fuel and tens of thousands for a livelihood. 
There is probably no resource of like value which 
affects directly a larger number of people. 

Many resources reach the consumer by a round- 
about path. The iron ore travels a long road 
from the blast furnace to the watch-spring. A 
white oak undergoes many changes before it 
appears in the dining room table. Numerous 
processes intervene between the wheat in the field 



44 ANTHRACITE 

or the hide on the cow's back and the muffins or 
the trim half -shoes. 

Some resources never reach the consumer at all. 
The steel in the freight car, for example, merely 
transports the wheat that finally appears as 
muffins. The copper and wood in the locomotive 
do not even come into contact with the wheat. 
The steel rails, ties and ballast, the bridges and 
cement culverts make the transportation possible. 
Yet the consumer never even sees or hears of 
these things. 

The relation between anthracite and the con- 
sumer is direct and immediate. Anthracite is 
used mainly for home consumption. In 1913, of 
the 71,296,000 tons shipped from the mines, 61.6 
per cent were of sizes above pea. This total in- 
cludes lump coal and broken coal, much of which 
is used for commercial purposes. At the same 
time it excludes pea coal, a great deal of which is 
now used for domestic purposes. Anthracite is 
sold chiefly in four sizes — egg, stove, chestnut 
and pea. For 1913 the shipments of these four 
sizes were as follows i 1 

Egg 8,928,792 long tons 

Stove 13,841,777 " 

Chestnut 17,065,632 " 

Pea 8,142,571 " 

Since pea, as shown by the recent change in its 
price, is now primarily a domestic and not a com- 
mercial coal, it appears that these four sizes of coal 

i "Mineral Resources of the United States, 1913," Part II, page 889 ff. 



THE PROBLEM 45 

alone account for about five-sevenths of the total 
amount of coal shipped. In other words, the 
amount of anthracite which goes every year to the 
consumers of the United States is approximately 
50,000,000 tons. 

No accurate statement can be made of the 
number of persons who use these 50,000,000 tons 
of anthracite; but if the average sale per family 
is five tons, 10,000,000 families (about 45,000,000 
people) are dependent for their fuel upon the 
supply of anthracite. If the sale averages ten 
tons per family, about 22,500,000 people would 
be dependent upon anthracite. These figures are 
only approximations, but they give some idea of 
the enormous extent to which anthracite is used 
in the homes of the American people. 

There were, in the United States in 1910, 91,- 
000,000 people, living in 20,000,000 families. This 
makes just under five persons per family. If the 
suggestion in the last paragraph was in any 
measure correct, from a quarter to a half of the 
families in the United States depend more or 
less directly upon anthracite for their cooking 
and heating. 

From a quarter to a half of the population 
of the United States is dependent upon the 
supply of anthracite coal, which comes pri- 
marily from five counties in the northeastern 
part of Pennsylvania. There is no other an- 
thracite coal of importance now being mined 
in the United States. The whole anthracite 
industry is concentrated in one small section of 



46 ANTHRACITE 

one State. 1 It thus affords an ideal opportu- 
nity for monopolization. 

If the anthracite deposits were scattered, as 
the bituminous deposits are, through all parts 
of the country, monopoly would be more difficult. 
With the available supply of anthracite concen- 
trated in one small area, the possibilities for 
monopolization are unexcelled. 

The anthracite industry, although restricted 
in area, has a widespread influence through the 
large number of consumers who look to it for 
their fuel supply. The millions of families who 
depend entirely or partly upon the supply 
of anthracite coal for their fuel comprise the 
greater part of the population of the northern 
and eastern sections of the United States. Here 
is a great body of people, all using the output of a 
natural resource which can be supplied from only one 
tiny part of the area upon which these millions live. 

Many workers are dependent upon the anthra- 
cite industry. The payrolls of the operators 
contain the names of 175,000 men and boys. 
In addition to this number, tens of thousands 
of persons employed by railroads and other 
businesses which depend for their existence upon 
the anthracite industry must be counted in as 
having a direct relation to anthracite. 

S. The Supply of Anthracite 

When mining operations began a century and 
a half ago, the three Pennsylvania anthracite 

1 For an elaboration of this point see "The Anthracite Coal Combination," 
Eliot Jones, Cambridge, Harvard University Press, 1914, Chapter 1. 



THE PROBLEM 47 

regions contained approximately 19,000,000,000 
tons of coal. Since that time, the amount taken 
from the mines or made unavailable by the aban- 
donment of old workings is equal to about 5,000,- 
000,000 tons, leaving an estimated reserve of 
14,000,000,000 tons. 

Apparently, the unused supply of anthracite 
is three times as great as the amount already 
used. Another important fact must be borne 
in mind, however. The amount of anthracite 
actually mined to date is only about 2,000,000,- 
000 tons. The amount "wasted" and "left in 
old mines" is 3,267,500,000 tons. Under the 
system of privately owned resources, which was 
so generally relied upon to stimulate ambition 
and arouse initiative, for each ton mined a ton 
and a half was left unused. To be sure, some 
of the old mines are being reopened at great 
expense, and the coal that they contain salvaged. 
For the most part, however, this coal must be a 
permanent loss. 

Experts figure that 25 per cent of the coal 
can still be secured from old mines and that 50 
per cent of the coal can be had from the new 
mines. The total available supply of anthracite 
is therefore about 8,000,000,000 tons. 1 

Taking the amount actually mined as a stand- 
ard, it appears that the coal still in the mines 
is equal to seven times the amount of the product 

1 The figures on which these statements are based will be found in "Increase 
in Prices of Anthracite Coal," House Document No. 1442, 62d Congress, 
Third Session, p. 126. 



48 ANTHRACITE 

to date and that the coal that can be made 
available for consumption is equal to four 
times the production to date. Anthracite is 
still, and for years will be, a resource that must 
play an important role in the life of the com- 
munity. 

At the present rate of mining, the supply of 
anthracite will last about one hundred years. 
Four generations of people will therefore look 
to the anthracite field of Pennsylvania as a 
source for their fuel supply. Discoveries and 
inventions may replace anthracite with some 
far more usable source of heat. Let the present 
situation continue, however, and for a century 
to come the anthracite field will present a prob- 
lem to the American consuming public. 

Although these figures are rough estimates, 
they are based on the best available expert 
knowledge. They may be incorrect in detail, 
but in the large they furnish conclusive evidence 
of the immense importance of anthracite to the 
consumer of today and of the great probability 
that for a long time to come anthracite will be a 
resource of the first importance to the American 
people. 

Millions of consumers and hundreds of thou- 
sands of workers depend directly and indirectly 
upon the supply of anthracite. This supply, 
to the extent of 8,000,000,000 tons is still avail- 
able for use. This and the succeeding generations 
must determine the conditions under which this 
anthracite shall be produced. 



THE PROBLEM 49 

4. The Basis for Anthracite Monopoly 

No less important than the facts regarding 
the available supply of anthracite are the facts 
that relate to the control of that supply. Here 
are millions of people who depend for their fuel 
upon one resource. Are they in a position to 
say how much coal shall be mined and under 
what circumstances? Their happiness and well- 
being depends, in part, on the anthracite coal 
which they use. Can they decide what shall 
be done in the coal fields? 

Obviously they cannot. First, because the 
coal fields are privately owned under a system 
of property ownership that permits the owner 
to do practically as he will with his own. Second, 
because the virtual control of the anthracite 
fields is vested in a very small group of persons 
who make common cause wherever their interests 
are threatened. 

The owners of the anthracite fields have suc- 
ceeded in establishing a monopoly of the most 
absolute character through a system of inter- 
corporate relations. There have been times 
when the monopolists were at a loss to make 
profits on their vast holdings of unused coal land. 
In recent years, however, the system of railroad 
control has brought huge benefits to the mon- 
opolists. 

There are quite a number of sources from which 
may be gained some idea of the extent of the 
combination in the anthracite industry. The 
inquiries conducted by the Interstate Commerce 



50 ANTHRACITE 

Commission and the Pennsylvania Railroad Com- 
mission provide much material. Some sugges- 
tions occur in the report by the United States 
Commissioner of Labor on the " Increase in 
Prices of Anthracite Coal following the wage 
agreement of May 20, 1912." Arthur E. Suffern 
devotes a long chapter of his book on "Concilia- 
tion and Arbitration in the Coal Industry of 
America" to an analysis of the anthracite situa- 
tion. The most elaborate and complete study, to 
date, of the anthracite combination is that pre- 
pared by Prof. Eliot Jones, and published in 1914. 
Professor Jones has gone carefully into the cor- 
poration reports, the various investigations of the 
anthracite industry, thereby securing data from 
the corporation as well as the governmental point 
of view. Professor Jones' book gives by far the 
best summary of the co-operative activities of 
those who own and control the anthracite mining 
operations. 

The anthracite field has for many years been 
the scene of attempts at combination, particularly 
between the carriers of coal and the coal operators. 
During the later years, however, the combina- 
tions have been primarily between the coal- 
carrying railroads. 

5. Unsuccessful Combinations 

The first combination to control the anthracite 
industry was formed early in 1873. From that 
time on to 1898 there was a succession of com- 
binations, each of which was dissolved because 



THE PROBLEM 51 

of the lack of group feeling among the partici- 
pants. 

The combination of 1873 was a combination of 
carriers. The Philadelphia and Reading, the 
Central Railroad of New Jersey, the Lehigh 
Valley, the Lackawanna, and the Delaware and 
Hudson were responsible for the formation of the 
combination. No attempt was made to restrict 
the output, but the amount of coal shipped to 
competitive points was limited in the following 
manner. An estimate was made of the total 
amount of coal at tide-water points during the 
year, and this total was divided among the com- 
panies entering into the agreement, according to 
the capacity of the mines shipping over the 
various lines. This agreement was to be enforced 
through a Board of Control composed of the presi- 
dents of the railroads involved in the combination. 

While the combination lasted it had a marked 
effect. Prices were higher and more stable as a 
result of the combination. 

Between 1876 and 1878 the anthracite coal 
trade remained under competitive conditions. 
There was a considerable increase in the produc- 
tion of coal. Prices fell and competition proved 
to be the death of profits. Even those who 
succeeded in the competitive wars felt the onus 
of reduced earnings. The effects of the com- 
petition were so marked that, to quote Professor 
Jones (p. 44), "In 1877, at least four of the 
important transportation companies, each of 
which had been paying liberal dividends for sev- 



52 ANTHRACITE 

eral years, suspended their dividend payments, 
and several others reduced their customary 
rates.' ' The results of competition were so 
evidently disastrous that a new effort at com- 
bination was made in 1878. For the next few 
years, while there was no actual allotment of the 
amounts of coal which any railroad might produce 
during the year, there was "a friendly under- 
standing among the companies" which resulted 
in "a combination, perhaps as effective as a 
formal agreement." 1 Under this tacit agreement, 
the number of days during which production of 
coal should be discontinued was regulated in 
accordance with the demand. For example, 
during 1880, Dr. Jones reports that the "pro- 
duction of coal was restricted 88 days," and 
cites the annual report of the Reading Railroad 
as authority for this statement. 

During the next few years a number of rail- 
roads changed hands. There was considerable 
buying and leasing, and interwoven with these 
commercial activities there was a strong effort at 
more complete combination. As a matter of 
fact, no effective organization was formed until 
the Reading system came into being. 

The spectacular rise of the Reading interests 
makes one of the most significant chapters in the 
history of modern finance. The Reading Rail- 
road leased the Lehigh Valley Railroad, and 
through the incorporation of the Port Reading 
Railroad it was able to secure a lease of the 

1 "The Anthracite Coal Combination," op. cit., p. 46. 



THE PROBLEM 53 

Central Railroad of New Jersey. The Phila- 
delphia and Reading Coal and Iron Company 
also secured control, through a lease, of the 
Lehigh Coal Company, and by another business 
arrangement, of the Lehigh and Wilkes-Barre 
Coal Company. The Lehigh Valley Coal Com- 
pany was a mining company of the Lehigh Valley 
Railroad, and the Lehigh and Wilkes-Barre Coal 
Company was "practically owned' ' by the Cen- 
tral Railroad of New Jersey. As a further asset 
in the organization of the anthracite field, Presi- 
dent Sloan of the Lackawanna announced "that 
the management of the Lackawanna was in sym- 
pathy with the plans of the Reading." "The 
Reading Railroad had thus secured control of 
two competing railroads and their coal companies, 
and had established, through purchases of stock 
and interchange of directors, a community inter- 
est with still another railroad (the Lackawanna)/' 1 
As a result of these transactions the Reading 
interests controlled 70 per cent of the total ship- 
ments of anthracite coal. At the same time, the 
Reading purchased largely of Boston and Maine 
stock, and an effort was made by the Reading 
system to secure a new market in New England. 
The effect of the combination on prices was 
immediate. Stove coal advanced more than a 
dollar per ton between February and September, 
1892. This advance led to a public outcry; the 
Attorney-General of New Jersey applied for an 
injunction to dissolve the lease by which the 

^'The Anthracite Coal Combination," op. cit., p. 52. 



54 ANTHRACITE 

Reading held the Central Railroad of New Jersey; 
the attempt of the Reading to enter New England 
met with hostility from an influential New York 
banking house; the credit of the Reading, already 
over-strained, broke during the panic of 1893, and 
in February of that year the Reading failed. From 
this failure until 1898 there was no effective union 
of anthracite interests. 

The strenuous efforts made between 1873 and 
1898 to perfect an anthracite combination are 
ascribed by Professor Jones to two causes: "First, 
the need of meeting the interest charges upon the 
huge obligations incurred by the companies in 
attempting to secure control of the coal lands. 
Second, the intermittent character of the trade.' ' 
(Pp. 57-58.) The experience of the railroads 
during this period taught some emphatic lessons. 
While an effective combination was maintained, 
prices went up, but so did dividends. Combina- 
tion and comfortable profits, to all appearances, 
were synonymous terms. On the other hand, the 
absence of combination led to bitter price wars, to 
lower prices, to vanishing dividends. Competi- 
tion was deadly; combination revivified profits. 

The lesson was plain. The moral was beyond 
question. The anthracite carriers accepted it and 
went about the formation of an effective combina- 
tion. 

6. An Effective Anthracite Combination 

Since 1898 the co-operation between the anthra- 
cite operators and carriers has been most com- 



THE PROBLEM 55 

plete. Professor Jones ascribes this co-operation 
to "railroad consolidation"; "the development of 
a community of interest among the railroads"; 
and "the practical elimination of the independent 
operators." (P. 59.) 

The Erie Railroad, early in 1898, purchased a 
controlling interest in the New York, Susquehanna 
and Western Railroad. The purchase was effected 
by means of a large Erie stock issue, the shares 
of which were exchanged for Susquehanna Rail- 
road stock. The purchase was carried out by the 
Erie in order to remove the danger of competition 
which the rapid development of the Susquehanna 
threatened. 

The movement toward railroad consolidation 
received a great impetus through a purchase by 
the Reading Company, which was the holding 
company of the Philadelphia and Reading Rail- 
way Company, and of the Philadelphia and Read- 
ing Coal and Iron Company, of a controlling in- 
terest in the Central Railroad of New Jersey. 
Court proceedings and bankruptcy had com- 
pelled the Reading interests to relinquish their 
former hold on the Jersey Central. The obsta- 
cles to consolidation were removed by the pur- 
chase in 1901 of 145,000 Central of New Jersey 
shares (53 per cent of the total outstanding stock) 
at $160 per share. 

The price paid for the Jersey Central stock was 
high, as compared with market quotations, but 
"the combination of the two railroads placed 
nearly one-third of the total shipments of coal 



56 ANTHRACITE 

under the control of the Reading Company." For 
the future, the advantage was even greater, be- 
cause the Jersey Central owned the second largest 
reserve supply of coal. Through the acquisition 
of this reserve, "the Reading system owned and 
controlled about 63 per cent of all the unmined 
coal in the state of Pennsylvania." 1 

The President of the Reading Company gave 
the following explanation of the purchase of the 
Central of New Jersey by the Reading Company : 

"The Reading must get to New York over the Jersey Central 
system. ... In December, 1900, I happened to be in New 
York and I was told that the gentlemen who controlled the New 
Jersey Central were tired of it and that the stock was for sale. 
I was also told that the Baltimore and Ohio Railroad had made 
an offer for this stock, which the parties had refused because they 
considered it too small. This information was a great surprise 
and I at once went to Mr. Morgan, who was a voting trustee 
of the Reading Company and told him that the situation was 
most alarming; that it would be the ruin of the Reading property 
if an antagonistic company got control of the Jersey Central, or 
if the Baltimore and Ohio got us by the throat in that way and 
could control our terminals in New York, and that therefore 
the matter called for prompt action. I told him then that I 
always thought that the Jersey Central could be legally bought; 
that the limitations in the laws of New Jersey applied only to 
leasing and that, under the powers of the Reading Company 
and under the statutes of New Jersey, we could undoubtedly 
buy a majority of the stock. He told me to keep my own counsel 
and look up the whole subject and see what could be done. I 
came home and I made a critical and careful examination of the 
reports of the New Jersey Central Railroad for a number of years, 
to see what in my judgment its stock would be worth, taking 
into account the future possibilities. I also took up the ques- 

1 "The Anthracite Coal Combination," op. cit., p. 62. 



THE PROBLEM 57 

tion of how we could buy it and finance it. I made a report 
to Mr. Morgan in about a week's time. It took me a good 
while to get all the information I got, because I had to do it 
secretly, you know, as counsel. I sent it to Mr. Morgan. . . . 
When I got home, one night in Reading, there was a call at the 
telephone and I went to the phone and Mr. Morgan was there, 
telling me to come to New York immediately, that I must come 
on at once about that Jersey Central business. I went to New 
York the next morning. I saw Mr. Morgan. . . . He said to 
me, "What do you think is the fair price ?" I said, "I have 
named what I think is the fair price in there." He called for 
Mr. Baker, who was the chairman of their committee, or a lead- 
ing man in it. Mr. Baker came over and we sat down and dick- 
ered for about five minutes, until Mr. Baker said they would 
take one hundred and sixty and I said I thought I would advise 
that, and I went to the phone and called up Mr. Welsh and Mr. 
Harris, who were, with myself, a majority of the executive com- 
mittee and they said, "Yes," and the deal was closed. That is 
the whole story. We did not even make a writing about it. 
Mr. Baker said he would undertake himself and with Mr. Max- 
well and friends to deliver us a majority of the stock." 1 

Professor Jones feels that President Baer over- 
emphasized the danger of competition. He seems 
to have minimized the obvious desirability of 
securing so large a proportion of the future coal 
supply. 

These transactions placed the Reading in a 
position of supreme importance. Holding nearly 
two-thirds of the available supply of unmined 
anthracite, and with a third of the annual ship- 
ments from the anthracite regions, the Reading 
interests were in a position to exert a great 
influence over the anthracite industry. 

1 "The Anthracite Coal Combination," op. cit., pp. 63-64. 



58 ANTHRACITE 

The movement toward combination was fur- 
thered by a large extension of control by a num- 
ber of other railroads over coal companies and 
coal lands. These developments placed under 
the direct control of the coal carriers the unmined 
anthracite and the machinery of production. 
They already owned the means of transportation. 
The control was thus made absolute, from mine 
to consumer. 

7. Railroad Unity 

Harmony in the anthracite coal fields has been 
furthered by the establishment of a greater 
degree of common interest among the railroads. 
This has been made possible through the inter- 
ownership of stock and through interlocking direc- 
torates. During the early periods of combination 
tonnage division had been resorted to as a method 
of establishing a community of interest. The newer 
device has proved far more effective. Professor 
Jones gives the following instance of the method 
pursued in carrying forward the movement. 

"An important step in bringing about greater 
unity of action in the management of the coal 
trade through the interchange of stock owner- 
ship was the joint purchase by several of the coal 
roads of a large block of the stock of the Lehigh 
Valley Railroad. Early in 1901 the Lake Shore 
and Michigan Southern, owning over 21.6 per 
cent of the stock of the Reading Company and 
in turn controlled by the New York Central, 
agreed with the Reading Company, the Central 



THE PROBLEM 59 

of New Jersey, the Lackawanna and the Erie 
to purchase $5,700,000, $1,000,000, $1,600,000, 
$1,850,000 and $1,850,000 respectively— in all 
$12,000,000— of the stock of the Lehigh Valley, 
or nearly 30 per cent of the total stock. The 
stock was not all purchased at the same time, but 
it is clear from President's Baer's testimony that 
the railroads jointly agreed to purchase the stock, 
for in his testimony he said that the Lehigh Val- 
ley was in bad shape, and it was thought very 
dangerous to let it go into a receiver's hands, 
because of the effect it would have on the other 
railroads and on general business. 

" After talking that over with a number of 
gentlemen, Mr. Morgan being anxious that it 
should be done, I came over to Philadelphia 
and saw Mr. Stotesbury and suggested that he 
see the trustees of the Packer estate and of the 
college — the Lehigh University had an interest 
in it. We agreed to buy the stock. Then we 
divided it up between the four systems. I in- 
sisted that the Lake Shore and the Vanderbilt 
System, which was the strong system, should 
take a big block of the stock and the rest of us 
should not be loaded down, because I did not 
know whether we could save the Lehigh Valley, 

11 After the purchases had been consummated, 
Mr. Thomas, who had been president of the Erie 
Railroad, was elected president and a director of 
the Lehigh Valley; Mr. Baer, president of the 
Reading System and of the Central of New Jer- 
sey, became a member of the Executive Com- 



60 ANTHRACITE 

mittee and of the Board of Directors, and Mr. 
J. R. Maxwell, Mr. G. F. Baker and Mr. H. 
McK. Twombly, all officers or directors of some 
of the other companies, became directors of the 
Lehigh Valley. The anthracite coal railroads 
thus virtually secured control of the Lehigh 
Valley and brought it into assured harmony with 
the controlling interests in the anthracite coal 
trade." 1 

8. Coal Mine Control 

The establishment of interlocking directorates 
has worked toward the same end. The presence 
on one Board of Directors of a man representing 
other transportation, mining or industrial inter- 
ests goes far toward bringing these interests into 
closer working harmony. 

Another important factor in the development 
of an effective anthracite combination has been 
the elimination of independent operators. This 
has been done in two ways: first, by purchase; 
second, by the general establishment of percent- 
age contracts. 

An interesting instance of this purchase method 
is the use made by the Reading Company inter- 
ests of the Temple Iron Company, which had a 
charter granting it very broad powers. Simpson 
and Watkins, who were large independent opera- 
tors, were bought out through the Temple Iron 
Company. The stock of the company was largely 
increased; bonds were issued, and through the 

1 "The Anthracite Coal Combination," op. cit., pp. 68-69. 



THE PROBLEM 61 

firm of J. P. Morgan & Co., the Simpson and 
Watkins property was sold for $5,000,000. 
Through an involved financial transaction, the 
Temple Iron Company finally obtained title to 
the property. The Reading Company, the 
Central of New Jersey, the Lehigh Valley, the 
Lackawanna, the Erie and the New York, Sus- 
quehanna and Western — all protected the credit of 
the Temple Iron Company by agreeing to take 
certain percentages of the capital stock of the 
company and of its funded debt. These per- 
centages were determined by the proportion of 
anthracite tonnage handled by each railroad. 
The purchase agreement became effective January 
1, 1904. By means of a proxy the practical con- 
trol of the Iron Company was left with the presi- 
dent of the Reading interests. "He and the 
presidents of the roads entering into the guar- 
antee were elected directors of the Temple Iron 
Company, as were also a few personal friends of 
Mr. Baer." 1 Although the original agreement 
included only part of the anthracite roads, "the 
other anthracite coal roads, except the Pennsyl- 
vania, have, since 1899, at some time or other, 
been represented on the directorate of the Temple 
Iron Company." 2 

An effort made by the Pennsylvania Coal Com- 
pany to build an independent railroad to tide- 
water led to the purchase of the company, through 
the firm of J. P. Morgan & Co., by the Erie. This 

1 "The Anthracite Coal Combination," op. cit., p. 80. 

2 Ibid., p. 82. 



62 ANTHRACITE 

gave to the Erie the full tonnage of the Pennsyl- 
vania Coal Company, which was producing in 
1899 nearly 5 per cent of the total anthracite 
coal shipments. 

A number of other purchases were effected about 
the same time. "Since 1900, numerous other 
firms have been purchased by the different rail- 
roads or by their subsidiary coal companies." 1 
The railroads purchasing coal companies included 
the Delaware and Hudson, the Pennsylvania 
Railroad, the Lehigh Valley, the New York, 
Ontario and Western, and the like. 

The remaining independent operators were 
brought into close affiliation with the carrying 
railroads by means of percentage contracts. 
After a long history of conflict between the rail- 
roads and the producing coal companies, a form 
of contract was drawn up which provided that 
the coal company should sell all of its coal to 
the contracting railroad; that the contracting 
railroad was to call for this coal as the condi- 
tions of the market seemed to require; that the 
call for the coal should be as equitable as pos- 
sible, and that for all sizes above pea, " sixty- 
five (65) per cent of the general average free 
on board prices of said sizes received at tide- 
water points' ' should be paid by the railroads 
to the producer. 

These contracts, since modified by the United 
States Supreme Court, gave stability to the busi- 
ness of the producer. At the same time, they 

1 "The Anthracite Coal Combination," op. cit., p. 35. 



THE PROBLEM 63 

secured to the coal operators an increase in the 
price which they received for their coal. The 
operators "practically surrendered forever their 
independence, agreeing to sell to the railroad, or 
its subsidiary coal company, their entire future 
output, to be delivered in such quantities and at 
such times as the buyer dictated. Mr. Simpson, 
of the old firm of Simpson and Watkins, testified 
before the United States Examiner in a recent 
suit that the railroads would not give him a 
contract for his coal, unless he made the con- 
tract for the life of the collieries. ,,1 The oper- 
ators seemed to have been willing to enter into 
these agreements because they could thus secure 
a higher return for their coal than they would 
have been able to secure through any means of 
independent marketing at their disposal. 

9. The Anthracite Problem 

The anthracite problem as it stands today, 
may be summarized in these terms. A valuable 
natural resource, localized in one small geographic 
area, is depended upon by millions of consumers 
and by tens of thousands of workers. For years 
this resource has been the object of constant 
public attention. The consumers have clamored 
against high prices; the workers have demanded 
higher wages and better conditions of labor. 
Meanwhile the owners of the resource have been 
actively engaged in efforts to increase their profits. 

The attempts of the owners of the coal fields 

l4 'The Anthracite Coal Combination," op. cit., p. 93. 



64 ANTHRACITE 

to secure larger profits have culminated, since 
1898, in a combination which has virtual control 
of coal lands, coal mines and coal-carrying rail- 
roads. The coal land owners have thus put them- 
selves in control of the means of marketing as 
well as the resource and the means of producing 
coal. 

Here is a resource privately owned. The 
ownership of the resource, as well as of the means 
of developing and marketing it, are concentrated 
under the control of one group of interests. 
This is the logical end of Herbert Spencer's 
reasoning, except that, instead of securing con- 
trol over an entire country, the anthracite inter- 
ests have secured control over an entire industry. 

The question now arises — given a natural 
resource of wide public importance, privately 
owned by one group of interests which also con- 
trols the means of transportation, what will 
happen to the consumer who uses the product 
of the monopoly, to the worker who sells his time 
and energy to the monopoly, and to the indi- 
viduals who participate in the property ownership 
by the monopoly? 



CHAPTER 3 

THE CONSUMER AND ANTHRACITE PRICES 

1. The Consumer's Point of View 

The consumer is vitally interested in the proper 
use of natural resources. He derives his liveli- 
hood from their products. His well-being depends 
upon the quality of these products and the prices 
at which he can get them. 

The consumer's interest is the largest and must 
always be the dominant interest in dealing with 
any natural resource. Every member of the com- 
munity is a consumer. Children and old people 
are consuming without producing. Those who 
are engaged in productive work are both consum- 
ers and producers. Each member, old and young, 
in the entire living population is a unit in the body 
of the consuming public. The consumers are the 
community. Anything which affects the con- 
sumer therefore affects the entire community. 

The consuming public outlives any individual in 
the community. There are 25,000 people in your 
city today. Ten die and ten are born. There 
are still 25,000 people. Each of these people is a 
consumer. Individuals come and go. The 
consuming public persists. 

The figures worked out by expert mining engi- 
neers indicate that unless some adequate substi- 
tute is found, the consuming public during the 

5 (65) 



66 ANTHRACITE 

next century will depend more or less upon anthra- 
cite for its supply of fuel. The personnel of this 
public will change. The body of it will remain. 
There will be millions of people in the United 
States to whom anthracite will be a resource of 
real and immediate significance. The anthracite 
problem as it exists today in the northeastern cor- 
ner of Pennsylvania for a long time will bear 
an intimate relation to the well-being of a great 
body of American consumers. 

2. The Status of the Consumer 

Everything that is made is intended, directly 
or indirectly, for use. Any manufacturer will 
tell you readily enough that he is not in busi- 
ness for his health. He spends his time turning 
out a product which someone wants. The man- 
ufacturer whose products supply no wants will 
sell no goods. Manufacturing is carried on for 
the purpose of giving people things that they 
desire. 

All business is based on the wants or demands 
of the consumer. Coal is broken in certain sizes 
because people want those sizes. The price of 
chestnut coal is higher than the price of certain 
other sizes because there is a greater demand for 
it than for any other of the domestic sizes. 

Unless someone wanted it, no coal would be 
mined. At the time when there was no apparent 
use for the smaller sizes of coal — buckwheat, rice 
and dust — they were thrown out on the culm 
dump with the other refuse of the mine. As soon 



PRICES 67 

as it was found that these finer grades of coal could 
be used, they acquired commercial value. In 
some cases the owners of great culm dumps were 
better off than the owners of mines. The culm 
was washed over and the fine coal sold at a good 
profit. 

The consumer is the objective point of product- 
ive activity. He is more than that. He is the 
beneficiary of productive activity. He is even 
more than that. He is the arbiter of productive 
activity. 

Every purchase is a vote. The consumer (pur- 
chaser) is constantly engaged in voting productive 
activities in or out of office. 

At one stage in the development of society 
everyone depended upon soft soap which was made 
in the home. At another stage hard soaps be- 
came commercially practicable and were made 
and sold in great quantities. At the present 
time, powdered soaps are coming into favor. 
Each time that a consumer buys a washing pow- 
der in preference to a hard soap he votes in favor 
of washing powder and against hard soap. There 
was a time when oatmeal stood under the grocer's 
counter in a barrel. Today it is sold in pack- 
ages. To be sure, the cost is greater, but there is 
the advantage of greater cleanliness and greater 
certainty as to the correct weight. Each con- 
sumer who buys oatmeal by the package rather 
than in bulk votes against oatmeal in bulk and 
favors package oatmeal. So effective has this vote 
been in recent times that bulk oatmeal is almost 



68 ANTHRACITE 

never met with in the large centers. In its place 
there are numerous brands of package oatmeal. 
The consumers have voted bulk oatmeal out of 
office. 

The consumer need not be intelligent in order 
to vote. He need not even be conscious that he is 
voting. When he puts down his ten cents for 
the package of oatmeal he makes the decision 
which determines that oatmeal shall be wrapped 
in packages rather than sold in bulk. 

No consumer can escape voting. Each pur- 
chase that he makes registers his decision, even 
though it be an unconscious one. The con- 
sumer is thus able to stimulate one kind of pro- 
duction or to retard another. He is able to 
make one brand of goods succeed at the expense 
of another. Advertising is the means that the pro- 
ducer takes to make the consumer vote in his favor. 

There is a sense in which the consumers are 
the dominating factors in the industrial world. 
If the consuming public were effectively organ- 
ized, it might decide that one brand of break- 
fast food should remain on the market and that 
another should go; that one kind of clothing 
should be worn and that another kind should 
be discarded. Unorganized as it is, the consum- 
ing public follows the fashions rather blindly, but 
none the less effectively. The decision of the con- 
sumer to wear or not to wear a certain type of 
hat determines whether the manufacturers of 
that kind of a hat shall be prosperous or go 
bankrupt. 



PRICES 69 

3. The Rights of Consumers 

Consumers have certain rights as regards them- 
selves, as regards those dependent upon them, 
as regards the character of goods and as regards 
the price of goods. Some of these rights are 
well recognized, others are still indefinite. 

The consumer has a right as regards himself 
and those dependent upon him. He has a right 
to know, for example, that when he buys a food 
product, his health will not be in danger because 
of poisonous preservatives. The consumer has 
another right entirely independent of his health 
or well-being — that is his right to have goods as 
represented. The markets of the East teem with 
traders whose one object in life is to misrepresent 
their goods. Among them the deceit of a cus- 
tomer is considered good business. This attitude 
was reflected until very recently in the well- 
known precept of the English common law 
caveat emptor — "let the buyer beware !" 

During recent times a complete revolution 
has taken place in the relation of buyer and 
seller. The seller places certain goods upon his 
counter. If they are misbranded, he is liable 
to prosecution. In the great centers of trade, 
reputable merchants and manufacturers stand 
ready at any time to make good losses which the 
consumers feel that they have sustained in pur- 
chasing goods that are not what they were repre- 
sented to be. The consumer is coming to regard 
his right to goods as represented as one of the 
fundamental rights in the economic world. 



70 ANTHRACITE 

The third, and by far the most important right 
of the consumer, is his fight to goods at reason- 
able prices. So significant is this right that it 
will be dealt with at greater length in a subsequent 
section. 

The consuming public, comprising the entire 
community, is developing certain rights, and is 
coming to look upon them as belonging natur- 
ally to consumers. The consumers are not yet 
conscious of either their rights or their power. 
Nevertheless they are learning to understand 
both. They are insisting upon legislation, de- 
manding reform, and above all else, they are 
interesting themselves in the prices of things. 

4- The Obligations of Consumers 

With rights go obligations. Consumers may 
justly assert certain rights to which they con- 
sider themselves entitled. At the same time, 
as consumers, they necessarily assume the obli- 
gations which go with their position as members 
of the consuming public. 

The first obligation of the consumer relates to 
the kind of goods that he buys. A man with a 
ten-dollar bill in his pocket can direct the course 
of production within the limit of ten dollars. 
For example, he can vote in favor of the manu- 
facturer of shoes by the purchase of a pair of 
shoes; in favor of a manufacturer of liquor by the 
purchase of champagne; in favor of the manu- 
facturer of jewelry by the purchase of a watch 
charm. Hats and shoes are necessaries; cham- 



PRICES 71 

pagne and watch charms are luxuries. The 
consumer is under a blanket obligation to see that 
the proper kind of goods are produced. If the 
community is in need of hats and shoes, he must 
vote for hats and shoes. 

The consumer must recognize an equally im- 
perative mandate to conserve the welfare of the 
future. Grant for the moment that the public 
sale of alcoholic liquors in a community is dis- 
advantageous to the on-coming generation. The 
consumer who casts his vote for alcoholic liquors, 
casts his vote against the future welfare of his 
own community. The moment he is convinced 
that alcohol will lower standards, he must vote 
against alcohol in favor of public health. 

The second obligation of the consumer is less 
important. The consumer must vote for the right 
quality of goods. Every purchase of a cheap or 
tawdry article is a vote in favor of establishing 
such standards in the community. The conscien- 
tious consumer will cast his ballot for quality. 

The third obligation of the consumer is in some 
ways the most important. The consumer must 
cast his vote in favor of reasonable conditions 
of production. 

The conditions surrounding the production of 
goods differ very widely. Food, clothing and fuel 
may be turned out by men and women who are 
well paid and carefully safeguarded against the 
risks incident to work in their industry, or they 
may be underpaid, overworked and forced to 
face constant and unnecessary dangers to life and 



72 ANTHRACITE 

health. Which of these two producers shall the 
consumer patronize? If he buys the goods pro- 
duced by the first, he is voting for fair conditions 
of production. If he buys the goods of the 
second, he is voting for the inhuman conditions 
of life and work. Such contrasts exist in many 
industries, and between these two extremes the 
consumer must choose. 

The consumer who takes his obligations seri- 
ously has only one path open. Whenever pos- 
sible he must make his choice in a way that will 
banish every banishable evil from industrial life. 
He must cast his vote against child labor; he 
must cast his vote against the sweat shop; he 
must cast his vote against the exploitation of 
women; he must cast his vote against inade- 
quate pay and over-work. In short, he must cast 
his vote against everything which in any way 
reflects unfairness as between industry and the 
worker. 

If the American consuming public would recog- 
nize this obligation to the workers and would 
exercise its power by voting energetically against 
bad working conditions and in favor of good ones, 
it could revolutionize the lives of millions of 
toilers. 

5. Reasonable Prices 

Among the rights upon which the consumer 
insists, the most tangible one, and the one which 
must attract the most permanent interest, is 
the right to reasonable prices. The consumer 



PRICES 73 

may not appreciate the quality of the goods* 
It is often difficult or impossible for him to know 
personally about the conditions under which 
the goods were produced. He does come into 
contact with prices. Each time that he pur- 
chases an article he faces the price problem. 

Price is the one thing about goods concerning 
which the consumer can have a really accurate 
knowledge. Price is forced upon his attention 
each time he makes a purchase. 

The consumer has a right and an obligation as 
regards prices. His right is the right to goods 
at a reasonable price. His obligation is the 
obligation to pay a price that will allow for fair 
conditions of production. Provisions for health 
and safety are frequently expensive. No matter 
what they cost, the consumer must expect to pay 
a price that will cover them. 

The consumer believes, and with every color of 
justice, that he has a right to goods at a reasonable 
price. The difficulty arises when he attempts to 
make a concrete estimate of what constitutes 
reasonableness. 

What is a reasonable price? 

There is, of course, no final way in which such 
a question can be answered. There are limits, 
however, within which prices may be called rea- 
sonable and beyond which they may be called 
unreasonable. 

The difficulty of defining " reasonable' ' as 
applied to price is enhanced by the difference 
that always exists between the viewpoint of the 



74 ANTHRACITE 

producer and the viewpoint of the consumer. 
The producer wants high prices. The more he 
gets for an article, irrespective of its cost of pro- 
duction, the better he is off. With the producer 
high prices and prosperity are synonymous. 

The viewpoint of the consumer is exactly 
opposite to that of the producer. The consumer 
wants low prices. The less he pays for an article, 
the better he is off. With the consumer, low 
prices and prosperity are synonymous. 

Any examination of the reasonableness of prices 
must take these two points of view into consider- 
ation. In the nature of things, a price which 
would appear reasonable to the maker would 
seem high to the buyer. At the same time, the 
price which the buyer would regard as high would 
be looked upon by the maker as low. 

It seems impossible, under the circumstances, 
to accept a standard of reasonableness set by 
either the producer or the consumer. Each 
approaches the question from a different angle; 
neither can fully understand the reasons which 
prompt the attitude of the other. There is 
nothing for it but to establish some scientific 
method of deciding reasonableness. Such a 
method would afford a price measure in terms of 
which the fairness of any given price might be 
decided. 

6. Methods of Making Prices 

Prices may be fixed by many different methods. 
First of all, there is the monopoly method of 



PRICES 75 

charging for an article all that can be gotten out 
of it. The phrase commonly used to describe 
this monopoly price is taken from railroad nomen- 
clature — "all that the traffic will bear." This 
phrase means that in making a given rate, the 
railroad charges all that it can possibly charge 
and still secure the traffic. Where competition 
is keen this price would be very near the cost of 
doing the business. It might even be fixed at a 
figure below the cost of production in individual 
cases. Where there is no competition, the rate is 
placed at a figure so high that the shippers will find 
it profitable to ship, but so that any addition to 
the rate would lead shippers to stop shipping. 
The rate maker aims to get the maximum traffic at 
the maximum rate. He is trying to get all he can. 

The principle of monopoly price may be illus- 
trated roughly in this manner. A group of inde- 
pendent ice companies which were in the habit 
of harvesting a million tons of ice a year and 
charging five dollars a ton for it, finds it cheaper 
to harvest half a million tons and charge ten dol- 
lars a ton. One-half the labor is saved, and the 
net profits are therefore considerably greater. 
To be sure, people may suffer or even die because 
of the high price of ice. This, however, is not a 
matter with which monopoly concerns itself. 
The object of monopoly is maximum profits and 
minimum expense. 

The monopolist fixes his price without any ref- 
erence to the cost of making the article. Thus, 
if you are working in a psychological laboratory, 



76 ANTHRACITE 

you will find it necessary to purchase certain 
appliances. A patented device which costs twelve 
cents to make, sells for a dollar. If the manu- 
facturer is asked, "Why do you charge a dollar 
for an article that costs twelve cents to pro- 
duce?" he will reply that only a few of the articles 
are made, and the profit must necessarily be high 
on that few, and that besides, he has a monopoly 
on the manufacture of the article, and people 
will pay a dollar for it as readily as they will pay 
fifty cents. Why then should he not charge a dol- 
lar? The laboratory chief, when asked about the 
matter, says that the laboratory needs these 
appliances, and that there is no other way to get 
them, except from this firm, and therefore the 
price demanded must be paid. The producer 
has his patent monopoly; the consumer wants 
the product and is able to pay well for it. The 
result is a price many times the actual cost of 
manufacture. 

Monopoly prices are fixed with the interests of 
the monopolist in view. There is no pretense at 
considering public interest. The purpose of 
monopoly is to make profits — the higher, the 
better. To be sure, a monopoly will not resort 
to illegal methods in order to make these profits. 
It will, however, use every legal means at its dis- 
posal to increase dividends. 

7. • Business for Profits 

The supposition on which monopoly prices are 
fixed is common to the modern business world. 



PRICES 77 

The business man is not in business for his health, 
nor is he in business in the interest of his com- 
petitors or of the people. He is in business, 
primarily, to make profits. Perhaps he is presi- 
dent of a corporation in which sums of money 
are invested by numerous people, who look to 
him, as business director, to return to them a six 
per cent dividend on their investment. Most 
people regard this dividend as legitimate, and the 
first duty of the corporation president is the duty 
of making the dividend. If, in order to make 
this dividend, he must raise the price of ice, bread 
or coal, he is popularly justified in doing so. The 
business world puts profits first. The business 
man is taught to make returns on his investment. 
The way to do this is to keep a generous margin 
between the cost of making a thing and its selling 
price. 

The business man expects a fair return on his 
investment. What is an investment? 

There is no general agreement as to what shall 
constitute an investment. Every enterprise that 
records a capitalization of half a million dollars 
does not represent the investment of so much 
money. Investment or business capital is made 
up, now in one way and now in another. 

The capital behind many businesses has been 
invested a dollar of money for each dollar of capi- 
tal. There are many businesses, however, in 
which the capital stock is based, not upon cash 
invested, but upon earning power. The books of 
a company show that during the past ten years it 



78 ANTHRACITE 

has been earning $300,000 a year; $300,000 will be 
a 6 per cent dividend on $5,000,000, therefore 
the company may be capitalized at $5,000,000. 
A charter is secured; stocks are issued to the ex- 
tent of $5,000,000, and the company, being a 
well-managed concern and a stable business, con- 
tinues to pay a regular dividend of 6 per cent on 
its capital stock. Now, it so happens, that in this 
particular case, the company controls a number 
of valuable patents, and because of this patent 
control, it was able to sell its product at a very 
high price. The men who established the busi- 
ness did not invest more than $1,000,000 in it, 
all told, and the cost of replacing the plant at the 
time it was capitalized did not exceed $2,000,000. 
The difference between the $1,000,000 invested 
and the $2,000,000 cost of replacement included 
$1,000,000 worth of plant that was built out of 
earnings or profits. The investment was, there- 
fore, $1,000,000, the value of the plant was 
$2,000,000, while the capitalization was $5,000,000. 
In this case, the organizers of the company 
"capitalized earning power/ ' 

The popular mind looks upon the $5,000,000 of 
capital stock as property. As a matter of fact, it 
is not tangible property at all, because the total 
value of the tangible property, new, would not 
exceed $2,000,000. The $5,000,000 represents 
tangible property plus good will, monopoly power 
and expectancy of future earnings. It is not 
tangible property, but earning possibility. 

There is a sense, of course, in which monopoly 



PRICES 79 

power is property. Since it will earn dividends, 
and since it may be transferred from hand to 
hand, a patent right may be regarded as property. 
At the same time, it is not investment in any 
sense of the word, and a very clear distinction 
must be made between the $1,000,000 which was 
investment in this plant, the $1,000,000 which 
was taken from earnings and used to build up 
the plant, and the $3,000,000 which represented 
capitalized earning power. 

It is perfectly conceivable that the earnings of 
the plant might be increased to $400,000. For 
example, it might be true that the prices charged 
for the monopolists' products are not full monop- 
oly prices. They may be represented by some- 
thing less than the exercise of full monopoly 
power. They are not "all that the traffic will 
bear." It might be assumed that by increasing 
the price of its product, this concern, by advanc- 
ing earnings to $400,000 instead of $300,000, could 
issue another $1,000,000 of stock and pay 6 per 
cent upon it also. This last million would repre- 
sent nothing less than the exercise of monopoly 
power. 

8. Business for Service 

The "get all you can" policy is not the only 
policy that is being followed in modern business. 
There is a large, and we have every reason to 
believe a growing, tendency for the producer to 
look upon his work as a profession and upon 
himself as a professional man whose business it 



80 ANTHRACITE 

is to supply people with the things they need — 
the best things at the most reasonable prices. 
Such business men try to see how low they can 
keep prices. 

One of the most striking illustrations of this 
point of view is the attitude which the Ford 
Motor Company has adopted towards its busi- 
ness. The original investment of the Ford Motor 
Company is small. The actual value of the plant 
is vastly greater than this original investment. 
The plant has been built out of earnings, and the 
company might readily capitalize not only the 
value of the plant, but the earning power of the 
plant. For example, if the Ford Motor Com- 
pany's earnings last year were $18,000,000, the 
business could be capitalized at $300,000,000 and 
pay a dividend of 6 per cent. 

The plan followed, in the case of the Ford Motor 
Company, is exactly the reverse of this, however. 
Instead of capitalizing its earning power and pay- 
ing dividends, the company has chosen to increase 
the wages of its employees and decrease the price 
of its product to the consumer. If the Ford Motor 
Company were to capitalize at $300,000,000, and 
were to earn 6 per cent on this capitalization, it is 
probable that no one would raise the least question 
in regard to the legitimacy of such a procedure. 
The reverse policy of sharing up the profits of the 
industry with the employees and with the pur- 
chasers has given rise to widespread commendation. 

The Ford scheme is a new one. In the past, 
and particularly during the era of trust organiza- 



PRICES 81 

tion which followed the Spanish-American War, 
earning power was capitalized in every direction, 
and great floods of bonds and stocks were issued 
against earning power as well as against tangible 
property. The business world told itself con- 
fidently that it had a right to everything that it 
could get. "All that the traffic will bear" was 
looked upon as a legitimate definition of business 
profits. During this period of business expansion 
great profits were reaped by the business interests, 
and the basis was laid for further profits by the 
issue of stocks and bonds based on earning power. 

The Ford plant is a long step in the opposite 
direction. Mr. Ford seems to look upon the 
actual investment as the legitimate basis for earn- 
ing power. He does not even care to capitalize 
the profits which have been turned back into the 
business. Instead, he aims to share his prosperity 
with his employees and the public in the shape of 
higher wages and lower prices. 

The contrast may be put in these terms. A 
soap manufacturer discovers a new formula which 
greatly improves the quality of his soap and 
lowers the cost of production by 50 per cent. 
This manufacturer has been making a reasonable 
profit. His new formula reduces the cost of pro- 
ducing a cake of soap from 3 cents to 1 cent. In 
the past, his soap has retailed for 6 cents. Shall 
he pocket the 2 cents which his new plan saves 
him, or shall he give it to the public in the form of 
cheaper soap? The answer of the old-time busi- 
ness world was that he must pocket all of the 2 

§ 



82 ANTHRACITE 

cents. The thought that lies behind modern 
business is that he must at least share his 2 cents 
with his employees, with the public or with both. 
In other words, the manufacturer must say, "I 
have perfected a means to give the public cheaper 
soap," with the same pride that the scientist 
says, "1 have devised a means for preventing the 
spread of tuberculosis.' ' 

A long distance intervenes between the atti- 
tude toward the present method of doing business 
and the one suggested at the end of the last para- 
graph. There seems to be no question, however, 
but that the movement of a part of the business 
world is away from the most barbarous phases of 
the ' ' all that the traffic will bear " doctrine, toward 
the idea of sharing with worker and consumer the 
accruing advantages of industry. 

9. Prices and Earning Power 

From the standpoint of the consumer, the 
matter sums itself up in these terms. If every 
business is to be organized and managed on the 
4 'all that the traffic will bear" basis, the con- 
sumer must organize some form of counter-activity 
that will regulate or eliminate monopoly power. 
Otherwise, he will be eaten up by the demands of 
the monopolized industries. If all businesses were 
built on original investment, if there were no 
watered values in capitalized earning power, the 
prices of most products now sold in the United 
States would be lower by many per cent than 
they are at the present time. 



PRICES 83 

Take the railroads as an illustration. The 
Interstate Commerce Commission is at present 
engaged in a physical valuation of railroad prop- 
erty. No one can predict what the outcome of 
this will be, yet it seems very probable to many 
experts that the actual value of the railroad 
property today will be equal to the capitalization 
of approximately $19,000,000,000. A question 
must be asked, however. How much of this 
$19,000,000,000 of railroad property represents 
investment? First of all, there were the men 
and women who put their money into railroad 
projects. This money is a legitimate investment. 
Then there were the cities and states which sub- 
scribed to railroad securities. This money is in 
the nature of public investment. Then there 
were the numerous grants of agricultural, timber 
and mineral lands which were made by the State 
and Federal governments to induce the railroads 
to build. Then, in the fourth place, there were 
the immense increases in land values which have 
occurred during the past few years, and which, 
more than any other single factor, have raised the 
actual value of much railroad property to a point 
approximating its capitalized value. If railroad 
interest and dividends were today paid on the orig- 
inal cash investments, there could be a very 
considerable cut in freight and passenger rates. 
The railroads have no intention of doing any 
such thing, however. They have capitalized 
their public land grants just as they have 
capitalized all of their other assets, and on 



84 ANTHRACITE 

these assets they propose to pay both interest and 
dividends. 

The question of monopoly prices resolves itself 
into the question of the method by which prices 
are to be determined. The unyielding monop- 
olist wishes to charge everything that he can get. 
The consumer demands that prices be fixed at a 
point that will yield a reasonable return on the 
actual business investment. 

10. The Monopoly Principle and Anthracite 

These general considerations regarding the 
status of the consumer, have a direct bearing on 
the anthracite problem. Anthracite consumers, 
like any other consumers, are the objective point 
of the productive process. Anthracite coal is 
produced in order that it may be consumed. If 
there was no demand for it there would be none 
produced. 

The consumers of anthracite have certain 
rights. There is no question regarding the adul- 
teration of anthracite, nor can any issue be raised 
in connection with the character of the goods. 
The question of reasonable prices necessarily 
comes to the fore as the chief problem involved 
in the anthracite situation. 

The consumers' obligations in the case of 
anthracite are practically limited to the condi- 
tions under which the coal is produced. The 
public, during recent years, has taken a more or 
less effective stand in regard to the living and 
working conditions of the anthracite miners. 



PRICES 85 

The dramatic labor struggles in the anthracite 
region have focused public attention on that ques- 
tion and stimulated in the great body of the con- 
suming public a sympathetic attitude toward the 
anthracite worker. 

11. Recent Movements of Anthracite Prices 

The Bureau of Labor at Washington publishes 
figures showing the increase in the wholesale price 
of anthracite coal since 1890. In that year chest- 
nut sold at $3.35 per ton; egg at $3.61 per ton; 
and stove at $3.71 per ton. During the subse- 
quent years prices ranged over a wide field. They 
were lowest in 1895 and highest in 1913. This 
holds true of each of the different grades of coal. 

The increase in the price of chestnut has been 
greater than that of any other size. This is ex- 
plained by the rapidly growing demand for chest- 
nut as a kitchen fuel. The wholesale price in 
1890 was $3.35; in 1913, $5.31. Egg advanced 
in price from $3.61 to $5.06; stove advanced 
from $3.71 to $5.06. The relative prices of three 
grades of anthracite appear in Table I, on the 
following page. 

The extreme fluctuations in the prices of these 
prepared sizes of anthracite coal occurred prior 
to 1898. Since that time there has been an up- 
ward movement most rapid in the case of chestnut 
and least rapid in the case of stove coal. The 
movement is none the less effective in all cases. 
Between 1898 and 1913 the price of chestnut 
increased almost exactly 50 per cent. During 



86 ANTHRACITE 

the same period, the price of egg coal increased 
40 per cent and the price of stove coal 33 per cent. 

Table I. — Index Numbers Showing the Relative Prices 

of Certain Grades of Anthracite Coal, 1890-1913. 1 

Year Chestnut Egg Stove 

1890 93.3 100.6 97.8 

1891 96.7 104.4 101.6 

1892 109.7 110.8 109.4 

1893 115.9 107.2 110.5 

1894 98.5 94.3 94.9 

1895 82.9 84.3 82.4 

1896 98.9 98.8 100. 

1897 103.9 105.7 105.8 

1898 98.8 100.2 100.1 

1899 101.4 93.8 97.6 

1900 108.9 99.7 104.0 

1901 120.4 112.9 113.9 

1902 124.0 121.5 117.6 

1903 134.2 134.3 127.1 

1904 134.2 134.2 127.1 

1905 134.1 134.3 127.1 

1906 135.2 135.3 128.1 

1907 134.1 134.2 127.1 

1908 134.1 134.1 127.1 

1909 134.1 133.2 127.0 

1910 133.9 133.9 127.0 

1911 139.0 133.8 126.7 

1912 146.9 140.0 132.6 

1913 147.8 140.9 133.4 

Previous to the combination of 1898, the 
importance of which has already been noted, the 
price of hard coal was subject to very much the 

1 Wholesale Prices, 1890-1913, U. S. Bureau of Labor Statistics. Bulletin 
No. 149. Washington, Government Printing Office, 1914, pp. 134-35. 



PRICES 87 

same extremes of variation that may be noted in 
the price of bituminous coal at the present time. 
Thus, chestnut coal was $3.35 in 1890; $4.17 in 
1893; $2.98 in 1895. The price of egg coal was 
$3.03 in 1895; $3.80 in 1897; $3.37 in 1899. The 
price of stove coal was $4.19 in 1893; $3.13 in 
1895; $4.01 in 1897. These figures typify the 
price movement upon which Professor Jones has 
so fully commented. Since 1898, however, fluctu- 
ations disappear and the climb of prices is con- 
sistent and regular. 

The price of anthracite, like the prices of many 
other products, has risen during the past few 
years. Indeed, the operators have repeatedly 
alleged as one of their reasons for increasing the 
prices, the increasing cost of operating the mines. 
The real question of importance, therefore, centers, 
not in the price of the coal, but in the cost of the 
coal. If the law of monopoly price is to prevail 
infixing the prices of anthracite, the operators will 
get all that they can. If some equitable basis for 
prices is to be maintained, the cost of production 
must be taken into consideration before the price 
of coal is fixed. 

12. The Cost of Producing Anthracite 

There has been a great deal of comment regard- 
ing the cost of coal production. Even after the 
vast body of data submitted at the investigation 
made by the Interstate Commerce Commission 
and the Pennsylvania Railroad Commission has 
been sifted, there remains some ground for specu- 



38 ANTHRACITE 

lation. At the same time, the report made by 
the Bureau of Labor following the labor difficulty 
in 1912, cites several detailed reports of the cost 
of coal production that are quite illuminating. 

Many consumers believe that the miner receives 
a major part of the $7 which they are called upon 
to spend for a ton of coal. They have been told 
repeatedly by the coal companies that if the 
wages of the miners are raised, let us say 10 per 
cent, a corresponding increase must be made in 
the price of the product in order to recompense 
the coal companies for the increased cost of pro- 
duction. As a matter of fact, the mining costs 
constitute a comparatively small element in the 
price of a ton of coal. 

Company A, cited on page 97 of the Federal 
Report on Anthracite Prices, 1 is described as "one 
of those whose operating costs have most largely 
increased during the period under consideration.' f 
In 1904, according to the figures, the cost of coal 
at the colliery was $2,046; in 1912, the cost was 
$2,215. In other words, in 1912, the 8,671,013 
tons of anthracite coal produced by this com- 
pany cost, on the average, $2.22 at the mine. 
The company reported in that year a total of 
27,463 employees. The $7-ton of stove coal pur- 
chased by the consumer in New York or Phila- 
delphia actually cost the coal mining company a 
little over $2. 

A number of items enter into the cost of coal. 
The actual mining, or cutting and loading coal, 

1 "Increase in Prices of Anthracite Coal," op. cit., p. 97. 



PRICES 89 

cost in 1912, 54 cents. Other labor costs inside 
the mine included the cost of maintaining road- 
way, of ventilation, of repairs, of pumping, of 
"general expenses,'' "extraordinary expenses,' ' 
"improvements," bring the total labor cost up 
to $1,309. In short, the actual cost of mining 
the coal and putting on the cars in the mine is 
only about two-fifths of the labor cost inside 
of the mine. Supplies, machinery and miscella- 
neous costs other than labor costs bring the net 
cost of coal inside the mine to $1,674. Outside 
the mine, the labor costs are $0,419 and the net 
outside costs $0,541. Inside and outside costs 
combined give for the total labor cost on the ton 
of coal $1,728, and for all costs $2,215. 

This illustration is only one of a number of 
instances, declared in the report to be typical, 
which the investigators brought to light in the 
course of their researches. The coal at the mine 
costs less than $2.25 average, per ton. 

These mine cost figures are most generous in 
the number of items they include. No effort 
has been spared to load on the cost account every 
item which it might be asked to carry. 

A number of items are included in some of the 
cost statements which seem unwarrantably high. 
For example, on page 104, under "general ex- 
penses," one company charges $0,052 per ton of 
coal for the expenses of the New York office. 
The same company includes in its charges such 
fixed charges as "taxes," "mine rents," "insur- 
ance," "law expenses," "other New York office 



90 



ANTHRACITE 



expenses,' ' "real estate department/' "sinking 
fund" and "extraordinary expenses." These 
items combined, add $0,306 to the cost of each 
ton of coal. Even with these additions, the total 
cost of this company per ton at the mine was only 
$2,179. 

The consumer who pays $7 for a ton of stove 
coal distributes his money somewhat as follows: 1 



$2 . 00 Retailer 




Retailer 


.. $2.00 


Freight 


.. $1.75 


Mine Profit 

Cost of Selling . . . 


.. $1.00] 
.. $0.10 


Mine Up-keep . . . 


.. $0.35 1 


Other Labor 


.. $1.25 


Mining 


. . $0.55 



$1.75 Freight 



$2.15 Mine Cost 



The figures in the foregoing diagram are neces- 
sarily estimates. They will vary from one mine 
to another and from one part of the anthracite 
field to another. They are typical rather than 
specific, yet they give a rough idea of the way 

i It should be noted that the mine profit of $1 per ton applies only to the 
domestic sizes of coal. Some of the smaller sizes are sold at an apparent net 
loss, which, according to one line of reasoning, should be borne by the domestic 
sizes. 



PRICES 91 

in which the price paid for a ton of coal is divided 
among the different parties at interest in its pro- 
duction. The figures for the mine costs are taken 
from the Federal Report on anthracite prices 
already referred to. The total wholesale price at 
tide-water, minus the freight rate, gives an amount 
equal to the mine costs, plus the cost of selling, 
plus the mine profit. The Federal Report on the 
Production of Coal for 1913, made by Edward 
W. Parker (pages 886 and following), seems to 
show a mine profit on domestic sizes of about 
$1.00. The difference between the wholesale price 
and the retail price represents the amount that 
goes to the retailer. This amount, of course, is 
not profits. All of the expenses of the business 
must be taken out of it. Unfortunately, no 
figures are at hand that show what part of this 
$2.00 is business costs and what part is profit. 
Thus, while the figures are approximations that 
would not hold true of this or that particular 
mine, they probably are true of the anthracite 
mines in general. 

The figures as cited in the above diagram are 
suggestive. The entire cost of the coal on the 
cars, ready for shipment from the mines, is only 
a little over $2.00, or less than one-third of the 
price paid by the consumer. Of this mine cost, 
only a quarter goes to the man who does the 
mining. All other labor costs, including the 
cost of keeping the mine in repair and the labor 
costs of improving the property, in so far as 
the mine can be improved, are equal to $1.25. 



92 ANTHRACITE 

The miner, together with every form of mine 
labor, therefore gets only $1.80 per ton, or 
one-fourth of the total amount paid by the 
consumer. 

It is evident from these figures that people must 
give over the idea that the miner is the chief 
beneficiary of the price paid for coal. The mine 
workers of all descriptions get only a quarter of it. 

The mine operators and the railroads together 
get the lion's share of the money paid by the 
consumer for his coal. Mine profit, selling cost 
and railroad freight rate cover $2.85, or two- 
fifths of the price of the coal to the consumer. 
This, it should be remembered, is secured by the 
coal owners and carriers after the cost of keeping 
up the mines (except taxes, interest and other 
fixed charges) have been charged against mine 
costs. The amount taken by the operator and 
the railroad is greater than the entire labor cost 
of each ton of coal, or even than the total mine 
cost of the coal. 

When the consumer pays $7 for a ton of stove 
coal, he is paying a far larger part of his money 
to the operator, the railroad and the retailer than 
he pays to the miner. 

13. The Cost of Getting Coal to Market 

The relation of the consumer to the price of 
domestic sizes of anthracite may be stated in a 
different manner. What are the actual costs of 
getting a ton of stove coal to market? 

The mine costs are clear. For labor the cost 



PRICES 93 

is $1.80; for mine upkeep, 35 cents, making a 
total mine cost of $2.15. 

There is a cost of selling the coal, which is prob- 
ably about 10 cents. This would bring the total 
cost of the coal, on the cars at the mines and sold, 
up to $2.25. 

The operating cost to the railroads of carrying 
a ton of anthracite, for example, to Philadelphia, 
is apparently about 50 cents, varying somewhat 
with the route taken. 1 Adding this cost to the 
total cost at the mines, it would seem that the 
actual cost of getting the prepared sizes of anthra- 
cite to the Philadelphia market, including the cost 
of selling, is about $2.75, or about one-half of the 
wholesale selling price. 

These are not final costs. The coal companies 
and the railroads must still pay their fixed charges. 
These figures do give some idea, however, of the 
relation existing between the amount that a con- 
sumer pays for coal and the fraction of this amount 
that gets into the hands of the men who mine and 
load the coal. 

1J+. A Better Explanation 

No one pretends that the price of anthracite is 
fixed with relation to its cost of production. 
Many of the producing companies have inadequate 
systems of cost determination, and the railroad 
officials representing the anthracite carriers have 
always insisted that it was impossible to make an 
accurate analysis of traffic costs as applied to one 

1 "The Anthracite Coal Combination," op. cit., pp. 137-38. 



94 ANTHRACITE 

commodity. However true this may be as a 
general proposition, the Interstate Commerce 
Commission and the Pennsylvania Railroad Com- 
mission found it possible to discover the costs of 
anthracite traffic. 

There is another explanation of the movement 
of anthracite prices. While costs have not been 
seriously considered, monopoly possibilities have 
received increasing attention. 

Until 1898 the prices of anthracite fluctuated 
as extensively as did the prices of bituminous. In 
1898 an effective combination of anthracite car- 
riers was formed. Since that time the price of 
anthracite was held stable until 1912. As if by 
common consent, all of the anthracite producers 
carried out an identical policy. In 1912, and 
subsequent to the strike, the price of coal was 
advanced 25 cents per ton, and again this was done 
with a truly astounding unanimity by all of the 
large anthracite interests. 

The truth is that the effective combination 
organized in 1898 has been doing what it will with 
prices. The price fluctuations, which are as great 
in bituminous coal between 1898 and 1913 as they 
ever were during a like period, have no counter- 
part in anthracite. Anthracite prices display a 
stability which suggests a far-reaching monopoly 
power. 

15. What should the Consumer Pay for Anthracite? 

There is no one answer to the question, "What 
should the consumer pay for anthracite ?■" If a 



PRICES 95 

reasonable price is to be charged, it must vary 
with each locality. 

The method of ascertaining a price that will 
be reasonable in a given locality may be briefly 
indicated. It is understood, in the first place, 
that a reasonable price includes the cost of pro- 
duction, plus a reasonable profit on the actual 
money investment. This would not include a 
return on increased land values nor a return on 
stock issues. The basis of profits in each case 
must be cash investment. The elements in such 
a reasonable price would be as follows: 

1. The cost of taking coal from the mine. 

Plus a fair return on the actual 
investment. 

2. The cost of transporting coal from 

mine to market. Plus a fair return 
on the actual railroad investment 
involved. 

3. The cost of retailing from the railroad 

car on the siding to the consumer's 
cellar. Plus a fair return on the 
actual investment in the retailing 
business. 

There is no way of putting these statements 
into accurate figures in the present limited state 
of the public knowledge regarding the anthracite 
industry. If the figures suggested in Section 13 
of this chapter are approximately correct — that 
is, if the ton of coal, from the mine to the retailer, 
costs $2.75 for operating expenses, and if, as 



96 ANTHRACITE 

has been frequently asserted, $1 a ton will market 
coal from car to cellar — the operating costs on a 
ton of coal would not exceed $4 in a market like 
Philadelphia. 

The sums that must be added to these operat- 
ing costs, as representing a reasonable profit on 
the investment, must be determined. There is 
apparently no information now published that 
covers the field. An intelligent accountant, with 
full power to investigate and report, might throw 
a great deal of light on it without much trouble. 

The consumers of anthracite are anxious to 
pay reasonable prices for their coal. There is 
just one way to proceed. The facts must be 
ascertained by men competent to determine such 
issues. Until such facts are a matter of public 
record, it is idle to speculate on the probable 
outcome of the investigation. It is worth not- 
ing, however, that there is every indication that 
the present prices of anthracite represent mon- 
opoly power rather than cost of production. 



CHAPTER 4 

THE WAGES OF THE ANTHRACITE WORKERS 

1. The Economic Status of Anthracite Labor 

A visitor to the anthracite coal fields would 
never suspect that the workers there were occupied 
in developing one of the richest of American 
resources. The annual production of only three 
minerals and fuels — pig iron, copper and bitu- 
minous coal — exceeds anthracite in value, while 
the value of the anthracite coal mined each year 
is twice the value of the gold and four times 
the value of silver mined annually in the United 
States. 

Anthracite, be it remembered, is not only a 
valuable natural resource. Concentrated in area 
and important as a commercial product, anthra- 
cite has been brought under the domination of a 
small but powerful group of railroad interests. 

The anthracite miner is therefore working in 
a region which, from a standpoint of natural 
advantage, is extremely rich; in an industry 
which produces a valuable and highly marketable 
commercial product; under the control of a 
number of splendidly organized railroads which 
work in substantial harmony. All of the advan- 
tages accruing from a modern business organiza- 
tion engaged in the development of a highly 
advantageous resource should be met with in 

7 (97) 



98 ANTHRACITE 

the anthracite region. If there is any industry 
in the United States which should contain a 
rich| promise of advantage for its workers, it is 
the anthracite coal industry; yet the visitor to 
that region is brought face to face with condi- 
tions of hardship that probably are not exceeded 
by those in any other industrial community of 
equal size in the northeastern section of the 
United States. 1 

An examination of the facts shows that anthra- 
cite labor seems to enjoy no particular advantage 
because of the fact that it is employed by a highly 
organized industry in the production of an im- 
mensely valuable commercial product. In other 
words, the benefits which must necessarily accrue 
from the peculiar advantages of the anthracite 
business do not accrue to the anthracite workers. 

The most obvious method of contrasting the 
status of the anthracite miner with that of other 
men doing like work is to compare wages. The 
figures that are available do not allow any very 
accurate comparison between anthracite wages 
and the wages in other industries, because since 
1902 there has been no adequate statement of 
anthracite wages. An appeal to operators and 
miners alike has failed to provide statistics of 
wages classified according to wage groups. Under 
the circumstances, the only recourse is to wage 
averages. 

1 For a description of the anthracite region, see "Anthracite Coal Communi- 
ties," Peter Roberts, 1904; "The Coal Miners," F. J. Warne, 1905; and "The 
Coal Miner," E. A. Sailers. 1912. 



WAGES 99 

Wage averages are, in one sense, extremely 
unsatisfactory, because the averaging-in of the 
higher paid and lower paid men does not give 
any accurate idea of the amount actually received 
by the individual man tinder consideration. At 
the same time, the averages do show, for a large 
group of men, the amounts received. These 
amounts, compared with similar averages for 
other groups, give an idea of the relation between 
the groups which are made the subject of 
comparison. 

The anthracite mine worker is not paid at a 
higher rate than the workers in other forms of 
mining. The only recent collection of material 
on mine wages was made by the United States 
Census Bureau, and published in a special report 
on " Mines and Quarries," 1902. The figures are 
very much out of date, yet they give some idea 
of the relation then existing between the wages 
of anthracite and of other miners. 

Table II. — Per Cent Distribution of Wage-earners 
According to Daily Wage Rates in the Production 
of All Minerals and of Certain Minerals. 1 

All 

Min- Anthra- Bitu- Pig Gold and 

erals, cite, minous, Copper, Iron, Silver, 

Rate per Day Per Per Per Per Per Per 

Cent Cent Cent Cent Cent Cent 

Less than $1.50 16.4 30.7 8.5 2.5 22.6 2.3 

2.50 61.8 84.8 73.8 54.6 90.1 10.2 

3.50 95.0 96.5 97.6 70.1 99.5 71.7 

$4.25 and over 4 .7 .1 1.5 .1 1.3 

Total men employed.. 581,728 69,691 280,638 26,007 38,851 36,142 



1 Special Report on "Mines and Quarries," 1902. Washington, Government 
Printing Office, 1905, pp. 96 and 97. 



100 ANTHRACITE 

This table shows that one-third of the anthracite 
workers received less than $1.50 daily; that more 
than four-fifths of them received less than $2.50 
per day, and over nineteen-twentieths of them 
received less than $3.50 per day. The wage 
rates paid in the pig iron industry are apparently 
lower than those paid in anthracite. The wages 
for bituminous, for copper and for gold and silver 
are higher. The anthracite wages are probably 
modified by the presence of a number of breaker 
boys. This fact undoubtedly accounts for the 
large proportion of persons receiving less than 
$1.50 per day. However, anthracite wages 
appear at a disadvantage when compared 
with the other principal mineral industries in 
1902. 

These figures must not be taken too seriously. 
The census officials note the extreme difficulty 
of getting satisfactory wage facts. Moreover, 
the wages in Pennsylvania and California cannot 
legitimately be compared unless some note is 
made of the differences in the cost of living. 
Though not at all conclusive, these facts suggest 
that the anthracite miner enjoys no peculiar 
advantage because of the character of the in- 
dustry in which he is working. 

Some later and more specific figures lead to 
the same conclusion. The Secretary of Internal 
Affairs of the State of Pennsylvania, in his report 
for 1912, Part III (pp. 321-22), shows the fol- 
lowing figures of average yearly earnings for 
anthracite miners: 



WAGES 101 

Table III. — Average Number of Wage-earners Employed 
in the Anthracite Coal Mining Industry, with Aver- 
age Yearly Earnings and Average Daily Wage. 

Average 
No. of 

Wage- Average Average 

earners Yearly Daily 

Employed Earnings Wage 

Contract miners 43,201 $728.84 $3.54 

Miners' laborers 33,292 495.92 2.40 

Other inside men 48,024 541 .23 2 . 63 

Outside workmen 29,554 526.88 2.56 

Breaker employees 16,238 358 .17 1 . 74 

The contract miners, in 1912, received an 
average wage of over $3.50 per day. At the same 
time, the mine laborers, inside men and outside 
men received average wages of about $2.50 per 
day, or in terms of yearly earnings, about $525 
a year. 

It is interesting to note that the number of 
miners and of the other inside men is about 
equal. So is the number of mine laborers and 
of outside workmen. These four groups make 
up the bulk of the mine employees. With the 
exception of the contract miners, their annual 
earnings (1912) were in the neighborhood of $525. 

A comparison between the wages of Pennsyl- 
vania bituminous and Pennsylvania anthracite 
workers may be made from this same report. 
Such a comparison shows that in 1912 the bitu- 
minous miners as a group earned a higher return 
than the anthracite miners. The higher earn- 
ings of the bituminous workers are due, in part, 
to the higher average number of days in oper- 



102 ANTHRACITE 

ation. Thus the bituminous mines reported 
268 days in operation, while the anthracite 
mines reported only 206. An examination of 
the average daily wages shows that the anthra- 
cite miner makes more per day than the bitu- 
minous miner, while the inside and outside work- 
men make about the same in either case. The 
position of the anthracite miner differs from that 
of the bituminous miner. The anthracite miner 
is in one sense an employer, since the mine laborers 
work for him. The bituminous miner works for 
himself or in partnership with another miner. 

Following are the wage figures for bituminous 
miners : 

Table IV. — Average Number of Wage-earners Employed 
in the Bituminous Coal Mining Industry, showing 
Average Yearly ^Earnings and Average Daily Wage. 1 

Average 

No. of Average Average 

People Yearly Daily 

Employed Earnings Wage 

Miners (pick) 54,178 $674.04 $2.52 

Miners (machine) 54,158 653.72 2.44 

Other inside workmen over 16 years . 30,485 708 . 84 2 . 65 

Outside workmen over 16 years 21 ,489 630.96 2 . 35 

Coke workers 12,004 610.22 2.07 

Where like employments are compared, as 
of the inside men who make roads, repair tim- 
bering, drive mules, handle motors, and of the 
outside men who are carpenters, engineers, black- 
smiths, dumpers, it will be found that the aver- 

1 "Annual Report of the Secretary of Internal Affairs," Part III, 1912, pp. 
327-28. 



WAGES 103 

age daily wages in anthracite and in bituminous 
mining are about the same, while the greater 
number of days worked makes the annual wage 
of the bituminous worker $100 a year higher 
than the wage of the anthracite worker. 

There is no evidence to show that the wages 
of the anthracite workers are higher than the 
wages of workers in other mining industries. On 
the contrary, there are facts which suggest 
that, if anything, the wages of anthracite workers 
are lower, in certain particulars, than the wages 
of some other miners. 

2. Anthracite Risks 

Much of the argument before the Coal Strike 
Commission was intended to show that the coal 
mining industry is an industry of peculiar risk, 
and that those who take up the work of coal 
mining, being employed in a particularly hazardous 
industry, should be paid in proportion to the 
hazards involved. The Commission summed up 
its opinion regarding the hazards of the anthra- 
cite industry by stating: "We find that it should 
be classed as one of the dangerous industries of 
the country, ranking with several of the most 
dangerous. The statistics so far available .... 
do not show a greater hazard than obtains in some 
other occupations, notably in the fisheries and in 
those of switchmen and freight-train crews on our 
railroads. Still, the requirements are exacting. ,,1 

1 "Report of the Anthracite Coal Strike of 1902." Washington, Government 
Printing Office, 1903, p. 51. 



104 ANTHRACITE 

If this statement is correct, the wage of the an- 
thracite workers should reflect these unusual risks. 

The accident rate for the anthracite mines is 
extremely high. The figures for 1913 showed 
that out of 175,310 employees, there were 624 
fatal accidents, or 3.56 fatal accidents per 1,000 
employees. The fatal accidents per 1,000,000 
tons of coal produced were 6.81. 1 The report of 
the Interstate Commerce Commission for the 
year ending June 30, 1913 (Statistical Abstract 
of the United States, 1913, p. 284), shows 3,635 
employees killed, out of a total of 1,716,380. The 
rate of mortality in the anthracite industry is 
therefore almost twice as high, taking all of the 
employees into consideration, as is the rate in 
the railroad industry. 

The Anthracite Strike Commission referred 
specifically to the risks of railroad switchmen, 
and freight trainmen. The figures available do 
not give the accident rates for these particular 
groups. They do, however, give the facts for 
certain larger groups, which may be compared 
with those men who are occupied with the actual 
operations of mining. The figures for 1913 in 
the Annual Report of the Department of Mines, 
Part I (p. 52), show that the number of miners 
employed was 44,346; fatal accidents, 286; fatal 
accidents per 1,000 miners 6.45; number of 
miners' laborers employed was 33,973; fatal acci- 
dents, 148; fatal accidents per 1,000 miners' 

1 "Report of the Department of Mines of Pennsylvania," Part I, 1913, 
Harrisburg, 1914, p. 75. 



WAGES 105 

laborers, 4.36; average number of days worked, 
242. It is impossible to make an accurate com- 
parison between these figures and the railroad 
figures, because it is not clear exactly what per- 
centage of the railroad accidents referred to 
trainmen. The figures do show, however, that in 
1912, there were 318,329 enginemen, firemen, 
conductors and other trainmen. The number of 
employees killed in collisions, derailments, " mis- 
cellaneous train accidents" and "other accidents 
in connection with railroad operation/' "includ- 
ing employees not on duty" was 3,231, or 10.1 
per 1,000 trainmen. The railroad crews pre- 
sumably worked about 300 days a year (25 per 
cent more than the time worked by the anthra- 
cite miners). Some allowance should be made 
in the calculation for employees killed who were 
not trainmen. This would reduce the ratio of 
10.1 per 1,000 somewhat. Reducing this ratio 
by 20 per cent, to make allowance for the less 
number of working days, it would seem that the 
fatal accident rates to men in railroad train crews 
were only slightly higher than the rates for contract 
miners and considerably higher than the rates for 
mine laborers. 

There can be little question that the anthracite 
industry is a high risk industry, particularly for 
the men who are engaged in getting out the coal. 
To what extent is this high risk reflected in the 
wages of the anthracite workers? 

The average yearly earnings of railway em- 
ployees are rather difficult to determine. The 



106 ANTHRACITE 

Interstate Commerce Commission reports the 
total number of employees of each grade and the 
total amount paid in wages to these employees 
by the railroads. Thus, for example, in 1912, 
in the Eastern District 1 there were 30,760 engine- 
men, 31,892 firemen and 66,346 trainmen. Con- 
ductors (whose wages are slightly lower than 
those of enginemen and considerably higher than 
those of firemen) are excluded because there is 
no occupation in the anthracite industry which 
compares in any way with that of the conductor. 
Their wages rank next to the wages of engineers. 
The average yearly earnings of these men, as 
shown by the Commission figures, 2 are: engine- 
men, $1,522; firemen, $901; other trainmen, 
$940. It will be seen very readily that the rail- 
way employees are compensated on a scale far 
above the scale of the anthracite miners. If the 
amounts of skill and technical knowledge required 
of the engineman and the contract miner are ap- 
proximately the same, 3 some sort of a comparison 
may be made between the two. It would appear 
that the engineman gets twice as much as the 
contract miner. The fireman and other train- 
men, compared with inside workmen, mule driv- 
ers, switch tenders, road menders and the like, 
show yearly earnings almost twice as great as the 
yearly earnings of miners' laborers and inside men. 

1 The Eastern District will be used as a comparison because the anthracite 
mines are in this district. 

2 Annual Report for 1912, pp. 28 and 29. 

8 To date the engineman is a more highly educated and perhaps a more 
skilled man. 



WAGES 107 

There is one fact that must not be lost sight of. 
The miner is working underground. The condi- 
tions surrounding his work are, in a sense, dis- 
agreeable. He is working in the dark. He is 
working often in damp places. Frequently the 
chamber is filled with dust. The railroad em- 
ployee is, on the other hand, always above ground. 
With the exception of the enginemen and firemen, 
the work is not particularly dirty or disagreeable. 
Furthermore, the hours of the railroad employees 
are extremely short. It would seem that no un- 
biased person would hesitate for a moment 
between railroading and coal mining, as far as 
the relative agreeableness of the occupations is 
concerned. The figures show that the risk of the 
underground men is almost as high as that of the 
railroad employees. Nevertheless, the earnings 
of anthracite miners are only one-half the earn- 
ings of railroad men doing work of an approxi- 
mately similar grade. 

3. Anthracite Wages and Wages in Other Industries 

The anthracite wages may be compared with 
the wages in other trades employing men. The 
comparison is made in these terms because the 
industries in which women and children are 
employed usually report lower wage figures than 
the industries in which men alone are employed. 

The Annual Report of the Secretary of Internal 
Affairs for Pennsylvania, Part III, 1910, 1 gives 
average yearly earnings for anthracite and bi- 

1 Since that date most of the wage data have been omitted from the report. 



108 ANTHRACITE 

tuminous workers and for workers employed in 
a number of other Pennsylvania industries. The 
number of days worked by the anthracite mines 
was 226; by the bituminous mines, 264. In 
other words, this year was an average year in 1 
both industries. The average yearly earnings 
in the anthracite mines were: miners, $711; 
miners' laborers, $468; other inside men, $527; 
outside workmen, $541. In the bituminous mines 
the average yearly earnings were: pick miners, 
$588; machine miners, $537; other inside work- 
men, $641; outside workmen, $518. 

Compare these figures for miners with the earn- 
ings in certain other industries where large num- 
bers of men are employed. 

Table V. — Average Yearly Earnings in Certain 
Pennsylvania Industries, 1910. 

Average 
No. of Men Yearly 
Industry Employed Earnings 

Pig iron 16,771 $626 

Steel production 1 1,319 693 

Rolling mills 131,430 678 

Tin and terneplate 10,240 779 

Cement 10,882 527 

Machinery 16,385 633 

Locomotives 36,202 718 

Only one industry (cement) reports earnings 
of less than $600. Every group of miners with 
the exception of anthracite contract miners re- 
ceived annual earnings of less than $600. The 
general level of wages seems to be lower in mining 



WAGES 109 

than in the other great man-employing manu- 
facturing industries of Pennsylvania. 

Similar figures are available in the Report on 
Statistics of Manufactures in Massachusetts, 
1911, page 2. 

Table VI. — Average Yearly Earnings in Certain 
Massachusetts Industries, 1911. 

No. of Men Yearly 
Industry Employed Earnings 

Cars and shop construction 5,152 $749 

Electrical machinery 14,393 605 

Leather, tanning and finishing 9,742 566 

The Massachusetts figures, like those for Penn- 
sylvania, seem to show that the large manu- 
facturing industries employing men pay average 
yearly earnings as high as the earnings received 
by the anthracite contract miners and consider- 
ably higher than the earnings of the miners' 
laborers and inside and outside workmen. The 
wage figures published by the New Jersey Bureau 
of Statistics yield similar results. 

There are employed around the outside of the 
mine large numbers of men — blacksmiths, car- 
penters, mechanics, firemen, common laborers and 
the like. The wages of this group average about 
$525. The machinists, carpenters and " other 
shop men" employed by the railroads in the 
Eastern District are $881, $736 and $687 respec- 
tively. (Annual Report, Interstate Commerce 
Commission, 1912, p. 29.) Here again the wage 
rate seems to be lower in the anthracite than in 
other man-employing industries. 



110 ANTHRACITE 

As far as the relative wages of anthracite miners 
and other workers in occupations of a similar 
grade are concerned, it would seem that the bal- 
ance is in favor of the workers in other occupa- 
tions. Despite the high risks of mining, most 
other occupations employing men in large numbers 
pay higher wages or wages equally high. When 
a comparison is made between anthracite and 
occupations of equal risk, like the railroad in- 
dustry, the evidence is overwhelmingly against 
anthracite wages. 

4. Anthracite Wages and the Labor Market 

The figures show that anthracite wages differ 
little from wages in other industries that are 
operated under similar conditions. If there is 
any difference, it is against the anthracite mine 
worker. This same point might have been argued 
deductively in view of the fact that in the United 
States, as in any other open labor market, wages 
are fixed by the laws affecting the entire labor 
world, and not specifically for any industry. 

The prospective anthracite miner must choose 
between working in an anthracite or in a bitu- 
minous mine; between working as a contract 
miner or as a track layer; between working in 
the mines and working in a grocery store; be- 
tween working in a mine and handling baggage 
for a local express company. The same grade of 
work, all other things being equal, will pay about 
the same rate of return in any one of a group of 
neighboring industries. The common laborer in 



WAGES 111 

a certain district is paid $1.50 per day whether 
he spikes down rails for the railroad or shovels 
gravel for the local contractor. In many cases, 
the existence of unions fixes the rate of wages. 
In any case, the laws of the labor market or the 
rules of the unions make a rate for labor, not 
for the particular industry in which the person 
is employed, but for the kind of work he is doing. 

This being true, no one is surprised to find that 
the anthracite miner is paid a wage approximately 
the same as the wages of other men doing similar 
work. Indeed, when the comparison is made 
between the railroad industry and the anthracite 
coal industry, one fact must be borne in mind, 
that among the best established and most con- 
servative trade unions in the United States, are 
the railway brotherhoods. Years of hostility and 
of aggressive diplomacy have finally placed these 
unions in a position where they can make and 
enforce effective demands against the employing 
railroads. There is probably no group of indus- 
tries in the country where the unionization is 
more complete or more effective. The result is 
the high wages already noted, and it is to be 
assumed that if the anthracite miners had an 
equally effective union, they would secure equally 
high wages, provided they could win as much public 
attention and public sympathy as the railroad 
brotherhoods have won. 

The anthracite coal operator does not ask him- 
self, "How much will I be able to pay John 
Strzynski? ,, Instead he asks, "For how much 



112 ANTHRACITE 

will John enter my employment?" The rate of 
wages that John will demand in the anthracite 
industry is fixed very largely by the rate of wages 
in the general labor market. 

Fact and logic alike lead to the conclusion that 
the anthracite miner enjoys no particular eco- 
nomic advantage because he is an anthracite miner. 
The fact that he is employed on a wonderfully 
rich natural resource yields him no additional 
income. He receives no share at all in the 
prosperity which goes with natural resource 
monopoly. 

5. The Adequacy of Anthracite Wages 

Turn for a moment from the comparison of 
anthracite with other wages, and ask a different 
question. Are the wages of anthracite miners 
adequate? 

This question bears no relation to other indus- 
tries. It confines the issue to the anthracite 
industry alone. When the anthracite miners 
present demands to the operators for increased 
wages, they may base their contention on one 
of three propositions. First, they may argue 
that their wages are lower than the wages of other 
men doing similar work. Second, they may 
argue that they are not receiving a fair share 
of the product which they are instrumental in 
creating. Third, they may argue that their 
wages are inadequate. The first two reasons 
have already been disposed of. The third one 
is now up for discussion. 



WAGES 113 

The adequacy of a particular wage, 1 like any- 
other scientific question, must be discussed in a 
spirit of honest truth-seeking. On all sides the 
problem of wage adequacy is leading to endless 
and often to bitter controversy between employ- 
ers and wage-earners, who usually base their con- 
tention that wages are too high or too low upon 
tradition or prejudice rather than upon facts. 
The result is dissension and misunderstanding. 
The problem of wage adequacy should be ap- 
proached scientifically. First, the scientist exam- 
ines the wage facts; second, he decides upon 
some standard by which wage adequacy may be 
measured; and third, he compares the prevailing 
rate of wages with that standard in order to 
determine the adequacy of wages. 

There are three propositions which are funda- 
mental in any consideration of wages: 

1. Industry must pay a wage sufficient 

to maintain the efficiency of its 
workers. 

2. Society must oppose any wage that 

leads to poverty, hardship or social 
dependence. 

3. Wages must be sufficient to enable 

the worker and his family to live 
like self-respecting members of the 
community. 
These statements are generally accepted. It 
seems evident that unless industry pays wages 

. P This argument appeared originally in the "Annals of the American Acad- 
emy," May, 1915. 

8 



114 ANTHRACITE 

that will maintain efficiency, its labor force must 
necessarily deteriorate. It seems equally evident 
that unless society insists on a wage sufficient 
to prevent poverty, hardship and inefficiency, 
the family, the school, the state and every other 
social institution will suffer. At the same time, 
if progress is to be made, wages must be sufficient 
to provide for self-respect, while they stimulate men 
to activity. So long as the present social system 
prevails the man's wage must be a family wage. 
The home is looked upon as the basic social in- 
stitution. Each man is expected to make a home 
and, having made it, to earn a living that will 
permit the wife to devote her time and energy 
to the care of the home and of the children. 
The mother's duty calls her to preside over the 
home. The father's duty calls him to secure a 
wage sufficient to keep his family on a basis of 
physical health and social decency. 

The average family as shown by the census 
figures contains somewhat less than five people. 
If, however, there is eliminated from the census 
figures the families consisting of one person and 
of two persons — that is, families in which there 
are no children — the average family will consist 
of nearly six persons. Among the foreigners, 
who make up the bulk of the anthracite workers, 1 
the families are considerably larger than among 
the Americans. 

Some unit of family size must be adopted in 

1 The Secretary of Internal Affairs for Pennsylvania, in his Annual Report, 
Part III, 1912, p. 322, gives 53,441 American and 86,997 foreign anthracite 
mine workers. 



WAGES 115 

any discussion of the family adequacy of wages. 
The family most frequently used in recent social 
studies consists of a man, wife and three children 
under fourteen years of age. Such a family 
corresponds in size with the average American 
family. The children are too young to work 
for wages and the mother should be in the home 
taking care of the children, not working outside. 
The situation in the anthracite field would seem 
to call for a somewhat larger standard family 
than that of three children. For the purpose of 
the present study, four children will be regarded 
as the normal or type family for the anthracite 
regions. 

6. The Anthracite Wage Scale 

A discussion of wage adequacy begins neces- 
sarily with an analysis of wages. What is the 
anthracite wage? 

The figures available showing the wages actually 
paid in the anthracite regions are meager in the 
extreme. There is, first of all, the statement of 
average yearly earnings and average daily wages, 
published by the Secretary of Internal Affairs 
(1912, Part III, page 322). These wage figures, 
upon which comment has already been made, 
are unsatisfactory because they appear in the 
form of averages. They show briefly that during 
the year 1912, when there were 206 working days, 
the average yearly earnings of the contract miners 
were $729; of miners' laborers, $496; of inside 
workers, $541; outside workers, $527. 



116 ANTHRACITE 

The only really satisfactory figures on wages 
in the anthracite region appear in the report of 
the Anthracite Strike Commission, and relate to 
the year 1901. During that year the average 
annual earnings of contract miners "ranged be- 
tween $550 and $600. Perhaps it would be safe 
to put the average at $560' ' (p. 50). A typical 
scale of annual earnings for 1901 was furnished 
by the Lehigh Valley Coal Company and pub- 
lished in the Report of the Commission (p. 
178). 

Table VII. — Annual Earnings of Contract Miners Work- 
ing Throughout the Year of 1901, and Average Days 
on which Miners Worked, Classified by Annual 
Earnings, for the Lehigh Valley Coal Company. 1 



Classified Annual Earnings Miners 

$1,000 or over 10 

$900 or under $1,000 10 

$800 or under $900 33 

$700 or under $800 93 

$600 or under $700 204 

$500 or under $600 295 

$400 or under $500 176 

'or under $400 76 

'or under $300 16 

Under $200 10 



Average 923 236 100.0 



Days on . 
which 
Miners 
Worked 


Per Cent 
of Total 
Miners 
Reported 


254 


1.1 


252 


1.1 


258 


3.6 


250 


10.1 


249 


22.1 


238 


31.9 


221 


19.1 


206 


8.2 


185 


1.7 


159 


1.1 



1 This report includes only such miners as worked in their respective collieries 
throughout the year, and whose names appeared, for some days, at least, on 
pay rolls of each month in the year. 



WAGES 117 

Tables published on subsequent pages of the 
report for the Lehigh and Wilkes-Barre Coal 
Company, the Philadelphia and Reading Coal 
and Iron Company, the Delaware, Lackawanna 
and Western Railroad Company and other coal 
companies, show approximately the same facts. 

A study of this table shows that one-third of 
all the miners receive between $500 and $600, 
while one-fifth receive between $600 and $700 
and another fifth between $400 and $500. Ap- 
proximately three-quarters of these miners were 
earning annually between $400 and $700. 

A considerable modification must be made in 
these figures in order to allow for the wage 
changes which have occurred since they were 
compiled. The average number of days worked 
per year, during the last few years is higher than 
the figures shown in this statement by five or 
six days, although in 1913 the mines worked 257 
days. The earnings also have increased. The 
wages of the miners were raised 10 per cent in 
1902, and again 10 per cent in 1912, so that the 
wage figures given in this table would have to be 
increased by a slight margin to allow for an 
increase in the number of working days and by 
about 21 per cent to allow for the increase in 
wage rates. 

This difference is shown by the difference in 
average earnings. The Commission found the 
earnings of contract miners to be somewhere 
between $500 and $600. At the present time 
the average earnings of contract miners are in 



118 ANTHRACITE 

the neighborhood of $700. This would repre- 
sent an increase of some 20 per cent since 1901. 

The contract miners constitute only a fraction 
(about one-quarter) of the total number of anthra- 
cite workers. The average annual earnings of 
the other workers in the mines appear to be 
from $150 to $200 less than the average annual 
earnings of the contract miners. Unfortunately, 
the Commission published no figures showing 
classified earnings among other than contract 
miners. If these facts were available, it would 
add greatly to the clarity of the issue. 

Are these wages adequate? Do the amounts 
paid by the anthracite industry to its employees 
enable them to support a family decently ? Three 
phases of the matter will be considered: 

1. The adequacy of wages to provide 

health and decency for a man, wife 
and four children under fourteen 
years of age. 

2. The adequacy of wages in terms of 

the business accounting and busi- 
ness practice employed by the 
anthracite companies. 

3. The adequacy to meet current social 

obligations and social standards. 

7. The Anthracite Wage and Physical Efficiency 

The adequacy of wages may be tested in terms 
of the health and decency which are involved in 
the maintenance of physical efficiency. If in- 



WAGES 119 

dustry is to support its workers, if society is to 
see to it that families are not forced to depend 
upon the community, wages must be sufficient in 
amount to enable the wage-earners to buy health 
and decency. At the present time the wages 
paid to a considerable portion of the anthracite 
workers are insufficient to permit decent family 
living. 

A number of attempts to ascertain the cost of 
a decent standard of living have been based on 
the assumption that physical health, education 
up to the age of fourteen and the other minimum 
requirements of modern American life were in- 
cluded in the term " decency.' ' 

There is a certain minimum of food, clothing, 
shelter and the other necessaries of life below 
which physical health and social decency are 
impossible. That minimum exists in terms of 
bread and butter, shoes, overcoats, medical 
attendance and school books. It is fixed by the 
demands of nature and by the standards of 
society, wholly independent of cost or price; 
therefore, any discussion of the cost of a decent 
living begins with an analysis of the various 
items which comprise living decency. The 
amount of food required by the man or by his 
family can be fixed with scientific accuracy. The 
amount of clothing is not susceptible of such an 
accurate statement, but it can be designated in 
terms of a certain number of garments per year. 
Most students of the standard of living have 
agreed that three or four rooms are necessary to 



120 ANTHRACITE 

house a family of five people decently. They 
have, likewise, made an allowance for medical 
attendance, for saving, for insurance and for 
recreation. 

The ordinary family with an income of less 
than $1,000 a year devotes about two-fifths of 
its expenditures to food. The food question 
may be handled with comparative ease, because 
modern science has given a fairly satisfactory 
basis for computing the food necessities of an 
individual or of a family. 

The ordinary man, doing moderate physical 
work, requires approximately 3,500 heat units of 
energy per day. Unless they are supplied in 
his food, he must ultimately become devitalized 
through lack of proper nourishment. A question 
might well be raised as to whether the work 
of the man in or about the anthracite mine is 
not of a character to require an increased quota 
of energy units. Some of the occupations are, 
of course, much more strenuous than others. 
On the whole, the probabilities seem to be rather 
in favor of a somewhat higher ratio than 3,500. 
However this may be, 3,500 calories will be 
accepted for the time being as a standard. 

An adult man requires 3,500 units of energy; 
an adult woman requires eight-tenths as much. 
For the convenience of discussion, a family upon 
which this study will be based includes a boy of 
twelve, a girl of ten, a girl of seven, and a boy 
of five. These children require respectively, 
seven-tenths, six-tenths, five-tenths, and four- 



WAGES 121 

tenths as much as an adult man. The family- 
taken together would, therefore, represent a con- 
suming power equal to that of four adult 
men. 1 

A number of standard of living studies have 
placed varying estimates upon the cost of 3,500 
heat units per day. The Federal Government 
dietitians in 1907 agreed that physical efficiency 
could not be maintained by families spending at 
the rate of 22 cents per man per day. Since 
1907 there has been an increase of 23 per cent 
in food prices, which would increase^the mini- 
mum limit to 27 cents. This is the minimum 
established by the New York Association for 
Improving Conditions of the Poor, and by the 
New York State Factory Investigating Com- 
mittee. The Bureau of Standards of New York 
City, after reviewing these and other facts, 
accepts a standard of $7,304 per week (27 cents 
per day, for their family was $7 per week). 2 

These figures refer to food prices in New York, 
where, according to the British Board of Trade 
Report and to other evidence, a poor man can 
buy his food more cheaply than in the outlying 
districts. An examination of the price schedules 
issued by the Bureau of Labor suggests that 
prices in the anthracite regions differ little if 
any from those in other parts of the Middle 

1 For fuller details regarding the methods of estimating the dietary, see 
"Financing the Wage-earner's Family," Scott Nearing, New York, B. W. 
Huebsch, 1913, Chapter 2, Section 7. 

2 Report on the Cost of Living for an Unskilled Laborer's Family in New 
York City, 1915, p. 13. 



122 ANTHRACITE 

Atlantic States. They are, therefore, probably 
at least as high as those for New York. 

The Federal study made in New England and 
the Southern States during 1908-09 fixed the cost 
of food per man per day at 26 cents for New 
England and 24 cents for the Southern States. 
From 1909 to 1914 the prices of food, rated 
according to the average consumption in working- 
men's families for the North Atlantic States, in- 
creased by one-fifth. If the estimates made in the 
Federal study were correct, the food cost in 1914 
would be approximately 30 cents per man per day. 

There has been a considerable, and it would 
seem a legitimate, question concerning the ade- 
quacy of the Chapin diet. The diet adopted in 
the Federal study certainly seems more reason- 
able. 1 It would be conservative, therefore, to 
accept 28 cents per man per day as a basis for 
estimating the food needs of a family in the 
anthracite regions. The food requirements of 
the family of four for a day would therefore be: 

Father = 1.0 X 28c. = .28 

Mother = 0.8 X 28c. = .224 

Boy of 12 = 0.7 X 28c. = .196 

Girl of 10 = 0.6 X 28c. = . 168 

Girl of 7 = 0.5 X 28c. = .14 

Boy of 5 - 0.4 X 28c. = .112 



$1.12 

This equals $7.84 per week, or $408 per year. 

1 " Financing the Wage-earner's Family," Scott Nearing, op. cit., Chapter 
2, Section 8. 



WAGES 123 

If recent dietary studies are correct, $408 per 
year should buy enough food to keep the anthra- 
cite mine worker, his wife and four children in 
physical health. 

A comparison may be made at this point 
between this food estimate and the estimates 
submitted to the Anthracite Coal Strike Com- 
mission in 1902. The Report states (p. 199): 
the "average quantity of principal articles of 
food consumed per family" in the anthracite 
region for 1902, was $275.14. Between 1902 
and 1914, the cost of the principal articles of 
food, according to the United States Bureau of 
Labor, increased about 39 per cent. Thirty- 
nine per cent added to the Strike Commission 
estimate would give a total of $382.44. This 
estimate, however, is for the "principal articles" 
of food, and includes families of all sizes. Such 
a statement would leave open the probability 
that incidental articles of food added to the cost 
of the "principal articles" would bring the food 
cost for a family of six very near the estimate 
here set down, $408. 

The second largest item in the family budget 
is the rent cost. Students of the standard of 
living have assumed that a family of six should 
have not less than four ordinary rooms in order 
to maintain health and decency. A four-room 
house in the smaller towns of the anthracite 
region costs about $80 a year. In the larger 
towns and cities the cost is about $130 per year. 

The next considerable item in the budget is 



124 ANTHRACITE 

clothing, and on this item there is a wide 
diversity of opinion. Chapin, in his New York 
study, allowed $33 per year for the man's cloth- 
ing; $23 for the woman's clothing; $15 for cloth- 
ing each girl and $12 for clothing each boy. 
There was an additional allowance for soap and 
laundry utensils. On such a basis the family 
which we are considering would spend $110 for 
clothing. The New York Bureau of Standards 
(1915) places the clothing item at the same figure 
as Dr. Chapin. The Federal study adds about 
one-third to the Chapin estimate. If the Chapin 
estimate is accepted, it is a bare minimum. 

The additional items of expenditure which are 
ordinarily met, appear in the following list, with 
amounts set after them equal to the amounts 
prescribed in the Federal study for a cotton mill 
town in Massachusetts. 

Fuel and light $24.00 

Doctor and medicine 13 . 98 

Insurance 20 . 80 

Amusement 15 . 60 

Church 10.40 

Newspapers, etc 8 . 84 

Incidentals 26.00 

Total $119.62 

These amounts, it should be noted, are for the 
most part lower than the allowances made for 
like objects by the New York Bureau of Stand- 
ards. Carfare is omitted. It is a necessary part 
of the budget in many cases. 



WAGES 125 

Slimming up, the costs of physical health and 
decency for a family of six in the anthracite region 
would be : 

Food $408 

Rent 80 

Clothing 110 

Additional items 120 

Total $718 

The rent item here used is for villages. In the 
cities $50 must be added for rent, bringing the 
cost to $768. This sum — $768 — the cost of decent 
living for a family of six persons in an anthracite 
city — is an estimate. Accurate information can- 
not be obtained until a first-hand investigation 
is made in the anthracite regions. The point 
that should be enforced is not the $768, but the 
fact that there is some minimum of subsistence 
below which health and decency are impossible. 
An investigation may show that $768 is too high — 
then the amount must be lowered; or that $768 
is too low — then the amount must be increased. 
There is a minimum cost of living decency in the 
anthracite regions. At the earliest possible mo- 
ment it should be determined by a careful investi- 
gation. Until that minimum is ascertained there 
can be no final adjustment of wages that will be 
either tolerable or equitable. 

Meanwhile the $768 estimate for the anthracite 
regions may be compared with the standard of liv- 
ing studies made in recent years. In New York 
City, for example, Chapin estimates the cost of 



126 ANTHRACITE 

decency at from $800 to $900 for a family of five 
persons. In Fall River, Mass., the Federal study 
makes an estimate of about $750 ; for Buffalo the 
estimate is $850; for Chicago it is $800.! The 
most recent estimate, made after a careful study 
by the New York Bureau of Standards, sets the 
cost in New York City at $840. 

The Fall River estimate ($750) is perhaps most 
comparable with the situation in the anthracite 
fields. The population of Fall River in 1910 was 
119,295; the population of Scranton in the same 
year was 129,867; and of Wilkes-Barre 67,105; 
of McKeesport 42,692; of Shenandoah 25,774. 
Thus two of the large anthracite towns correspond 
somewhat in population with Fall River. The 
food costs in the anthracite region, as shown by 
the reports on retail prices, published by the 
United States Bureau of Labor, do not differ 
materially from other sections in the eastern part 
of the United States. The rent cost for Fall 
River was about the same as that for the cities 
of the coal regions ($130 per year). Other items 
of expense, such as clothing, fuel and light, health, 
insurance, etc., do not differ in the two places. 
It would seem, therefore, that with the exception 
of the clothing item, which was estimated at a 
rather high figure in Fall River ($136.80), there 
should be a fairly accurate correspondence between 
the requirements of a family in the two places. 
The fact should be borne in mind that the Fall 
River study was based on a family of five, and 

1 "Financing the Wage-earners' Family," Scott Nearing, op. cit., Chapter 3. 



WAGES 127 

this study is assuming a family of six. The fact 
should be further emphasized that all of the 
studies, with the exception of that of the Bureau 
of Standards, were made from four to six years 
ago. During that time the cost of living has in- 
creased considerably. 

How does this figure ($718 for villages and $768 
for cities) compare with the wages paid to anthra- 
cite workers? In so far as averages are an index 
of wages, many of the contract miners receive a 
wage of $800 or more. The laborers, inside and 
outside workers, with average daily wages of $2 
to $2.50, would be able to earn $750 a year only 
by working a full year of 306 days. The largest 
number of days worked by the anthracite miners 
in recent years was 257 days, and that was well 
above the average of the five-year period. 

Many contract miners are apparently in receipt 
of annual earnings that will provide living decency 
for a family of four young children. The great 
bulk of anthracite workers, however, seem to be 
in receipt of wages that will not buy such living 
decency. 

There are many ways in which the miner may 
maintain conditions of living decency. He may 
refrain from marrying or from having children; 
his wife may take boarders; when his children 
grow older they may contribute to the family 
income; his wife may work at some regular occu- 
pation ; he may find extra work outside of mining 
towns; or he may supplement the family income 
with a cow, pigs, chickens or a truck patch. All 



128 ANTHRACITE 

these are possibilities. Nevertheless, the obliga- 
tion remains upon industry to pay a living wage to 
its workers, and the bald fact of a wage scale 
largely below the cost of decent family living 
stares every man with young children square in 
the face. 

From the standpoint of social well-being, every 
man in the anthracite region who is receiving a 
wage that is insufficient to buy physical health 
and decency for his family of young children is 
inadequately paid. How many such men are 
there? Future investigations alone will show. 

8. The Anthracite Wage as a Business Proposition 

The wages paid by the anthracite industry to 
a great body of its workers are inadequate to pro- 
vide health, efficiency and decency for a moderate- 
sized family. They are even more inadequate 
when they are considered from the standpoint of 
up-to-date business practice. 

Many a successful business man, who is con- 
fident that "the workers are paid all that they 
are worth/ ' and that "wages are far too high, 
any way,' ' has never stopped to analyze wages 
from a strictly business point of view. The wage- 
earner is, in reality, a business man. His place of 
business is his home. The object of his business 
activity is the rearing of a family in good health 
and with a generous supply of education. To 
this end, the worker labors during most of his adult 
life. 

Business men have worked ardently to safe- 



WAGES 129 

guard business interests. They have talked a 
great deal about the importance of business 
stability; of conservatism in finance; of the 
returns due a man who risks his wealth in a busi- 
ness venture; and of the fundamental necessity of 
maintaining business on a sound basis. After 
centuries of experiment they have evolved what 
they regard as a safe and sane method of financial 
business procedure. Every successful business 
man tries to live up to the following well-estab- 
lished formula : 

First. He pays out of his total returns, or gross 
receipts, the ordinary costs of doing business — 
materials, labor, repairs and the like. These 
payments are known as running expenses or up- 
keep. 

Second. After up-keep charges are paid he 
takes the remainder, called gross income, and pays 
out of it the fixed charges — taxes, insurance, 
interest and depreciation. 1 

Third. The business man, having paid all of 
the necessary expenses of doing business (the 
running expenses and the fixed charges), has left 
a fund (net income) which, roughly speaking, is the 
profits of the business. Out of this net income, 



1 A depreciation charge is one that is made against the wearing out of capital. 
A paper manufacturer buys a machine for which he pays $1,000. Experience 
tells him that this machine will wear out in ten years. Therefore the manufac- 
turer sets aside each year a sum which at the end of ten years will equal $1,000 
(a new machine). In this way the business man keeps his capital intact. 
While the individual machines, tools and the like do wear out, the accounts of 
the business are so kept that these pieces of capital will be automatically 
replaced when they are too old for use. The depreciation charge is recognized 
everywhere as a legitimate and necessary fixed charge on business. 



130 ANTHRACITE 

dividends are paid, improvements and extensions 
of the plant are provided for. 

Fourth. The careful business man increases the 
stability of his business by adding something to 
his surplus or undivided profits. 

This formula may be stated in terms of anthra- 
cite bookkeeping. Very few of the coal mining 
companies make any satisfactory public statement 
of accounts. Here is one that will illustrate the 
principle involved. 1 

Table VIII. — Statement of Operations of the Lehigh 
and Wilkes-Barre Coal Company, 1912. 

Gross earnings $18,742,623 

Total expenses 2 14,982,263 

Net income $3,760,361 

Deductions 

Interest $814,390 

Sinking Fund 460,000 

$1,274,390 

Surplus for the year $2,485,971 

Dividends 1,197,625 

Total surplus, June 30, 1912 $3,683,596 

The expenses of doing business were $3,750,000 
less than the receipts. Even after interest, div- 
idends and $500,000 for a sinking fund had been 
paid out, more than $1,000,000 remained. This 

1 "Poor's Manual of Industrials," 1913, p. 706. 

2 Includes colliery [improvements, $261,181; royalties, $341,089; taxes, 
$719,469; and "value of coal sold from stock, $1,469,365." 



WAGES 131 

sum, added to the surplus accumulated from pre- 
vious years, left the company, at the end of the 
year, with over $3,500,000 of "surplus." 

The profits in the anthracite business go very 
largely to the railroad interests, and since the 
railroad accounts are clearer than those of the 
coal companies, a statement of anthracite rail- 
road accounting will serve as a further illustration 
of the methods of sound business practice accepted 
by the anthracite owners. The operating statis- 
tics of the Delaware, Lackawanna and Western 
Railroad for 1912 are reported in Poor's Manual 
of Railroads, 1914, p. 193. 

Table IX. — Operating Statistics of the Delaware, 
Lackawanna and Western Railroad, 1912. 

Gross earnings $37,564,5 1 1 

Total expenses 24,146,423 

Net earnings 13,418,088 

Other income 6,054,567 

Gross income $19,472,655 

Deductions: 

Taxes $1,771,980 

Rentals 5,847,278 

Interest on bonds 6,486 

Renewals and betterments 1,720,698 

Miscellaneous 84,242 

Dividends 6,028,800 

Total deductions $15,459,484 

Surplus for the year , 4,013,171 

Total per cent earned on stock. . . 33 . 17 



132 ANTHRACITE 

The bookkeepers of the Lackawanna begin with 
the total returns or gross earnings of $37,000,000. 
From these they deduct the expenses of carrying 
on the business. To the net earnings which 
remain they add incidental income from divi- 
dends, rentals, other properties, etc. The total is 
gross income. Observe that in the operations of 
this road, a third of the gross earnings appears 
as net earnings, and the gross income of the road 
is equal to half the gross earnings. From gross 
income is deducted taxes, rentals and interest. 
These are the fixed charges, obligations which 
must be met if the business is to continue. From 
gross income the bookkeepers also deducted 
$1,750,000 for renewing and improving the prop- 
erty of the road, as well as $6,000,000 for dividends. 
After all of the necessary deductions had been 
made, $4,000,000 (an amount equal to 11 per cent 
of the gross earnings) remained as surplus, which 
the road lays aside for a rainy day or a special 
dividend, as circumstances may dictate. 

Like every carefully handled business, the Lackr 
awanna — 

1. Paid its running expenses. 

2. Paid its fixed obligations. 

3. Divided up its profits. 

4. And kept a nest egg. 

The year 1912 is not an exceptional year in the 
history of the Lackawanna. From 1905 to 1912 
the per cent earned on the stock varied from 22 
per cent in 1906 to 53 per cent in 1909. The 
amount paid in dividends was $1,838,000 in 1898. 



WAGES 133 

It remained at this figure until 1903. From 1904 
to 1908 the dividend payments were about 
$5,000,000 per year. In 1909 the dividend rate 
was 85 per cent, including a special dividend of 
75 per cent. The total dividends paid that year 
were $22,861,586. In 1910, $6,000,000 in divi- 
dends was paid, and in 1911, $16,399,200. 

The showing made by the Lackawanna is in one 
sense exceptional, because of the high dividends 
paid by that road. On the other hand, the 
method of carrying on business is typical of the 
method pursued by every sound business organiza- 
tion in the United States. Here, for example, 
are the operating statistics of the Lehigh Valley 
Railroad, another anthracite carrier. 

Table X. — Operating Statistics of the Lehigh Valley 
Railroad for 1913. 1 

Gross earnings $43,043,372 

Operating expenses 29,107,820 

Net earnings 13,935,552 

Other income 2,023,545 

Gross income $15,959,097 

Deductions: 

Taxes, rentals, interest on bonds, 

miscellaneous $7,197,268 

Dividends 6,060,800 

Adjustments 1,079,500 

Total deductions $14,337,568 

Surplus for the year $1,621,529 

Total surplus, July 1 $25,066,231 

i "Poor's Manual," 1914, p. 263. 



134 ANTHRACITE 

The dividend rate and total dividend payments 
of the Lehigh Valley are lower than those for the 
Lackawanna. Nevertheless, the same general 
principles hold good. Expenses are paid out to 
total earnings. The balance must be sufficient to 
meet the necessary fixed charges, to pay dividends 
and to leave an adequate surplus. In the case of 
the Lehigh Valley, this surplus has mounted up to 
$25,000,000. 

Every modern business man disposes of the total 
receipts of his business in some such way as that 
indicated. The business man who cannot pay his 
running expenses, fixed charges and dividends, 
and show some surplus, is scanned critically. 
Should he fail to pay dividends, he is considered 
unprosperous. If he does not meet the interest 
on his bonds, he is taken into court and declared 
a bankrupt. Running expenses, fixed charges, 
dividends and surplus are not merely fair; they 
are essential to business success. They are con- 
sidered a " right' ' by the organizers of every 
legitimate business. 

Suppose the anthracite worker, who is striving 
to support a family on a wage ranging from $2.50 
to $3.50 a working day ($500 to $900 per year), 
should apply to the financing of his family 
affairs the financial formula adopted by any 
well-managed modern business. Since he must 
allow for running expenses, fixed charges, 
dividends and surplus, he would proceed as 
follows : 

First. He would pay, from the total family 



WAGES 135 

income, the family running expenses — food, cloth- 
ing, housing, medicine and the like. 

Second. From the remainder, his gross income, 
he would take interest on the investment which 
has been made in bringing up and educating his 
wife and himself ; insurance against all reasonable 
contingencies, such as sickness, accident, death 
and unemployment; and a sum for depreciation 
sufficient to compensate for the inevitable de- 
crease in his earning power and for the old age 
during which he and his wife can no longer earn 
anything. 

Third. The remaining net income should be 
sufficient to enable the worker to pay himself 
dividends proportionate to the excessive risks 
which he runs in bringing a family into the world 
and attempting to rear it; and sufficient to add 
at least something to the surplus which the family 
lays aside to provide against such untoward 
events as births, deaths and prolonged sickness. 

The workman who conducted his affairs on this 
basis would be a sound, sane, safe financier. He 
would also be a seven-day wonder. If the pre- 
ceding section established any point, it was that 
a large percentage of wage-earners receive a wage 
which will not pay even decent running expenses. 
Any business man who attempted to conduct a 
business on a basis that would pay only the 
flimsiest of up-keep charges would be regarded as 
a subject for mental treatment, yet the bulk of 
anthracite workers find themselves in exactly that 
predicament. They are conducting a family 



136 ANTHRACITE 

business on a basis that will not pay reasonable 
running expenses. The legitimate fixed charges of 
business — interest on the investment, adequate 
insurance and depreciation — are far above the 
reach of most wage-workers who have a family of 
six to support. The ordinary worker's family is 
a bankrupt concern — it cannot even meet the 
interest on its bonds. And dividends? The ordi- 
nary worker is thankful if he can pay the bill 
incident to up-keep. Dividends are a luxury of 
which he does not dream. 

Place before any level-headed man of affairs 
this proposition: "I have a business which is 
barely able to pay running expenses. We can't 
meet our fixed charges, and our wildest flights of 
imagination have never carried us as far as divi- 
dends and surplus. Will you join in the venture ? ' ' 
The statement is grotesque, yet it sets forth the 
financial position of a great body of anthracite 
wage-earners. 

One further point should be noted. After the 
business man has paid running expenses and fixed 
charges, the remainder is income — "net income." 
The great mass of wage-earners who never receive 
enough to pay more than their bare running 
expenses have no " income" in the real sense of 
that word. They are getting mere up-keep or 
subsistence. 

As a business proposition, for a family of six, 
the ordinary anthracite wage is absurdly inade- 
quate. No business man would consider it. It 
violates every business standard which the prac- 



WAGES 137 

tice of the modern man of affairs recognizes as 
legitimate. Every concept of modern business 
management cries " shame' ' at the very thought 
of the business proposition which the anthracite 
wage-scale presents to tens of thousands of its 
workers. 

9. The Anti-Social Nature of the Anthracite Wage 

The health inadequacy and the business inade- 
quacy of the anthracite wage can be demon- 
strated statistically. The proof of the social 
inadequacy of wages rests upon more general 
considerations. 

Society must develop a system of compensa- 
tion which will stimulate industry and thrift 
among the people who do its work. A wage sys- 
tem or any other system of distributing the 
products of industry must be based on an adequate 
appreciation of this fundamental principle. 

The first, and probably the most fundamental, 
social objection which may be raised against the 
present wage scale is that it fails very largely to 
stimulate the ambition of the worker. There are 
two reasons for this failure. On the one hand, 
the wage scale is so utterly rigid that the man 
doing good work is placed on the same footing 
with the man doing poor work; the enthusiastic 
worker is placed on the same basis with the 
indifferent worker. This holds true of piece-rate 
payment as well as of time-rate payment. The 
rule of most producing establishments is " any- 
thing that will pass the inspector." Furthermore, 



138 ANTHRACITE 

the individual may work as hard as he pleases, 
devoting all of his energy to the work in hand; 
despite this, he is unable to raise his wage rate 
and very frequently is unable to increase his wages. 
At the same time, industry is organized on such 
a large scale basis that the number of positions 
"at the top" is strictly limited. Among the 
employees of the American railways, for example, 
one in one hundred is an officer. The proportion 
is higher for manufacturing industries, although 
it is seldom that more than 10 per cent of the men 
employed in an established industry hold positions 
which involve even a moderate amount of respon- 
sibility and initiative. 

The wage scale is fixed either by agreement 
between the employer and the union, or by custom 
and common consent. No one even pretends that 
there is a definite relation between the values pro- 
duced by the worker and the wage which he 
secures. 

The worker is not paid in proportion to his 
product. Wages are never fixed on that basis, 
with this single exception — that no employer can 
afford to pay any more in wages than a group of 
men are producing in product. The law of 
monopoly, "all that the traffic will bear," is the 
law which fixes the anthracite wage. An employer 
has a Scotchman working for him at $3 a day. 
An equally efficient Lithuanian offers to do the 
same work for $2. The employer is not in busi- 
ness for his health, and the work is given to the 
lowest bidder. 



WAGES 139 

An employer never determines a wage by asking 
the question: ''How much does this man pro- 
duce ?" Rather he asks, "What will it cost me to 
get another equally efficient person in his place?" 
It is the cost of replacement and not the values 
created in production which determines the wage 
that a man receives. 

The phrase, "He gets all that he is worth,' ' 
means merely this — that the employer is paying 
him as much as he has to pay another equally 
efficient person to do the same thing. Whether 
he is hiring bricklayers, bookkeepers or coal- 
heavers, the wage that he pays depends upon 
the supply and demand of labor. This law 
is excellently illustrated during a time of 
financial and industrial depression, when there 
is a surplus of labor and a dearth of oppor- 
tunity for employment. Many industries at 
once reduce their wages because they are 
able to get all of the people that they want at a 
lower figure. 

The wage contract, as it is called, knows no 
social morality and is based on no standard of 
social ethics. It is subject only to the law of 
supply and demand, and to the law of monopoly 
price. The employer pays his labor as little as 
he can. The worker demands and gets as much as 
he can. Until recently there has been no general 
idea that a minimum wage was a social necessity. 
The individual laborer, bargaining with the 
employer, made the best terms he could. If labor 
was scarce, he was successful ; if it was a drug on 



140 ANTHRACITE 

the market, his wages were reduced to a starva- 
tion level. 

Another consequence follows from the ruthless 
bargaining of the competitive labor market. The 
bargain takes place between the employer and a 
worker, irrespective of social obligations. The 
consequences are doubly disastrous to the man 
with the family depending upon him. A common 
occupation, quarrying, for example, may be car- 
ried on by married or by single men. The em- 
ployer does not even put himself to the trouble of 
asking whether the prospective employee is mar- 
ried or single, because that makes no difference if 
a man is handy with his tools. The man with 
a family is brought into active competition with 
the man who has no family obligations. The 
native-born head of a household must accept 
labor terms which are satisfactory to the foreign- 
born single man. Industry does not inquire into 
a worker's 'social obligations. It simply asks 
whether he is able to do the work, and at what 
price. The competition of the labor market does 
the rest. 

Society demands and expects that men shall 
support families. The future of the state hinges 
upon the fulfillment of this presupposition. At 
the same time, the modern economic organization 
makes no attempt to assist the man who is bring- 
ing up a family to face the competition of the man 
who has no family dependent upon him. 

There is no relation between the social (family) 
needs of a man and the wage which he receives. 



WAGES 141 

Wages are fixed wholly independent of social 
relations. 

The anthracite wage is anti-social. The present 
system of wage payment fails to stimulate workers 
to industry and thrift because it has not given 
them a reward in proportion to their exertions 
and ability. There is no relation between product 
and wages. Rather wages are fixed by competi- 
tion and monopoly. The present wage scale fails 
completely to provide a return in proportion to 
social needs. The simplest requirements of social 
progress call for ambition, for justice, and for the 
provision of health necessities. The present 
anthracite wage scale offends even these primitive 
social standards. 

10. The Anthracite Wage and the Increased Cost of 
Living 

The wage of many anthracite workers, when 
measured in terms of physical, economic or social 
adequacy, is meager. The wages paid to a great 
body of the anthracite mine workers are not 
sufficient to maintain physical, economic and 
social efficiency. Another phase of the matter 
remains to be considered — the relation between 
the increase in anthracite wages and the increase 
in the cost of living. 

Granted some will insist that the wages of the 
miners are not entirely adequate to provide for 
the demands of efficiency, it is still true that the 
miners have been constantly bettering their 
position. 



142 ANTHRACITE 

The past few years have witnessed several 
bitter labor struggles in the anthracite region. 
The workers have maintained a powerful trade 
union at great cost. During the labor disturb- 
ances, the workers have sacrificed, the wage loss 
has been enormous, property has been destroyed, 
and the social and political organization has 
broken down. What is the outcome? 

Three periods must be considered. First, there 
is the period 1890 to 1914; second, the period 
1903 to 1914; and third, the period 1911 to 1914. 
The cost of living facts that are available date from 
1890. The great labor struggle of 1902 marks an 
epoch in the struggle of the anthracite worker for 
better conditions of life; and the readjustment in 
1912 gives a brief period of contrast with the 
situation at the present time. 

The ordinary worker's family spends at least 
two-fifths of its money for food, one-fifth for rent; 
one-sixth for clothing; and the remainder for 
miscellaneous things like insurance, saving, recre- 
ation, education, health. 

The United States Bureau of Labor has been 
collecting figures on food costs since 1890. Dur- 
ing those years, in the North Atlantic States, the 
cost of food rose 60 per cent. From 1903 to 1914 
the cost of food rose 40 per cent. From 1911 to 
1914 the cost of food rose 17.2 per cent. 

Rent costs are difficult to secure. No one has 
made any study of rent costs; hence there are no 
figures available. Isolated instances indicate that 
there has been a considerable increase in rent 



WAGES 143 

during the past twenty years. Just how great 
that increase has been no one is in a position to 
say. 

The most complete clothing figures are pub- 
lished in the wholesale price bulletins of the United 
States Bureau of Labor. Between 1890 and 1913 
the wholesale prices of clothing rose about one- 
fifth. Between 1903 and 1914 the prices rose 
about one-third. 

If the figures were available it would be profit- 
able at this point to work out the increase in the 
total cost of living, weighted, or apportioned 
according to the amount of money spent for each 
item. The figures, unfortunately, are not to be had. 

There is another very important consideration 
that is frequently overlooked in discussions of the 
cost of living. " Living' ' means doing the things 
that are done in the group to which one belongs. 
The cost of living means the cost of keeping up 
with the social standard. 

During the past twenty-five years there has 
been an immense increase in the standard of life. 
Many new lines of expenditures have been intro- 
duced, as, for example, the cost of health, of recre- 
ation and of education. Doctors, dentists, moving 
pictures, compulsory education laws, newspapers, 
magazines and the like have all been added to the 
list of things that the ordinary American considers 
necessary to his welfare. Twenty-five years have 
made these numerous additions to the standard 
of living. Those who live in American communi- 
ties must keep up with the times. 



144 ANTHRACITE 

It is no argument to say that a great body of 
the anthracite workers are foreigners. One of the 
chief aims of American social organization is to 
"Americanize" the foreigner. If that means any- 
thing it means getting the foreigners to adopt the 
American standard of living. 

Twenty-five years have witnessed a consider- 
able increase in the price of the articles necessary 
to maintain life. They have also witnessed a 
rapid rise in the standard of life. Has the increase 
in anthracite wages been sufficient to offset this 
increased cost of living? 

Following the labor disturbances in the late 
eighties, there was a period of a dozen years dur- 
ing which the workers bargained individually with 
their employers and took what they could get. 

During the period immediately preceding the 
break-up of the union, the miners had worked out 
a rather high standard of co-operation. The 
union paid sick and death benefits and benefits 
to widows and orphans. There was a miners' 
newspaper, which encouraged unity of action. 
There were co-operation stores, and through the 
efforts of the union, the first mine inspection law 
was passed. Another law was enacted which 
compelled the weighing of coal. 1 

The union was broken up through the per- 
sistent efforts of the operators. "With the sur- 
render of the men, they were compelled, as a 
condition of obtaining work, to sign away the 
right of having their coal weighed. The sliding 

IL i " Conciliation and Arbitration," op. cit. t p. 214. 



WAGES 145 

scale continued in operation, but the determina- 
tion of the basis and the prices paid to labor 
were entirely in the hands of the operators till 
the strike of 1900." 1 Until 1900, therefore, there 
was no such thing as a standard wage in the 
anthracite fields. Hence, no adequate descrip- 
tion of the wage conditions during these years 
can be given. Indeed, it is not until the investi- 
gation made by the Anthracite Strike Com- 
mission in 1902 that a really adequate statement 
of the wage problem is made. 

State reports do contain some material on wages 
during this period. These figures, gathered by 
Mr. Stiff ern, are as follows : 2 

Table XI. — Earning and Working Time of Anthracite 
Mines, 1890-1911. 

Earnings of 
Contract Miners 
Days Average 

Year Worked Daily Yearly 

1890 179 $2.39 $427.81 

1897 233 1.79 417.84 

1902 175 2.83 495.97 

1904 231 2.96 684.78 

1906 207 3.09 641.13 

1909 213 3.06 651.28 

1911 233 3.19 743.79 

The earlier figures are extremely unsatisfactory. 
The average yearly earnings are secured by mul- 
tiplying the average daily wage by the number 
of days worked. There is no indication of the 

1 "Conciliation and Arbitration," op. cit., p. 214. 
*Ibid„ p. 360-61. 

10 



146 ANTHRACITE 

method that was pursued in ascertaining the 
average daily wage. The figures, from many- 
points of view, are open to grave question. 

Taking the figures on their face, they show that 
the average daily wages of contract miners in- 
creased 33 per cent — or almost exactly one-third, 
between 1890 and 1911. Suffern gives no figure 
for average daily wages in 1897, but dividing the 
yearly earnings by the number of days worked, 
a figure of $1.79 is secured. If this figure is 
correct, the rise in average daily wages since 1897 
is far greater than it was since 1890. 

Turning now to average yearly earnings, the 
increase has been considerably greater than in 
average daily wages, because of the higher number 
of days worked during recent years. Suffern 
states the number of days worked in 1890 as 179. 
The United States Geological Survey places it at 
200 and makes the average number of days 
worked in 1890, 1891 and 1892 about 200. Accept- 
ing this figure, ^the average annual earnings in 1890 
(at $2.39 per day) would have been $478; and 
the average yearly earnings in 1911 were $743.79 
in a year that reported 233 working days. The 
increase in average yearly earnings is therefore 
55 per cent. Between 1911 and 1914 wages were 
increased (1912) about 5 per cent. In 1914, 
however, the number of days worked was only 
229. There would, however, be some addition 
to this 55 per cent. 

No further use will be made of these figures, 
because they are unsatisfactory in the extreme. 



WAGES 147 

It may be noted that the figures for the anthra- 
cite industry published by the Bureau of Mines, 
the United States Geological Survey and the 
Secretary of Internal Affairs of Pennsylvania do 
not always correspond. Several instances of this 
have already been noted. Suffern is not specific 
regarding the origin of all of his figures, and 
further analysis seems to promise little result. 
The figures, on their face, show that between 1890 
and 1911, the wage rates of contract miners 
increased by about 33 per cent, and the annual 
earnings by about 55 per cent. 

The really reliable wage data must be drawn 
from a period subsequent to the investigations of 
the Anthracite Strike Commission of 1902. The 
first complete year since the work of this Com- 
mission is 1903. 

As a result of an immense expenditure of time 
and effort, the Commission of 1902 fixed a wage 
scale which seemed to them equitable. Their 
conclusions are open to question, but accepting 
them at their face value, and assuming that the 
wage which they established was a fair wage, 
what changes in wages and in the cost of living 
have occurred since that time? 

The Commission established a sliding scale, 
under which the miners' wage was to be increased 
with each advance, beyond a certain point, in the 
wholesale price of anthracite coal. For 1903 this 
sliding scale award set the wages of the miners 
at a point 4 per cent above the rate awarded by 
the Commission. In 1912 the sliding scale was 



148 ANTHRACITE 

abolished and a flat increase of 10 per cent for 
contract miners and of Hi per cent for inside day 
workers was substituted. That agreement expires 
in March, 1916. Until that time the increase in 
wage rates for anthracite miners over the award 
of 1902 is practically 10 per cent. In other words, 
the anthracite workers are receiving a wage rate 
of 10 per cent more in 1915 than they received in 
1903. 

There has been a considerable increase in aver- 
age yearly earnings. The average number of 
days worked in 1903, 1904 and 1905 was 207. 
In 1912, 1913 and 1914 the average was 239. 
Here is an increase of 15 per cent in the working 
time, making a very substantial increase in the 
amount earned by the anthracite workers. 

The real test of wages is not the number of dol- 
lars received, but the amount of food, clothing and 
shelter they will buy. The facts available before 
1903 are too crude to permit of effective calcula- 
tions, but since 1903 there are figures that will 
allow of some elaboration. 

There are, first, the figures for number of days 
worked, and second, of food prices. The real 
wage, resulting from these two sets of figures, will 
give the purchasing power of anthracite wages in 
terms of food. 

The Anthracite Strike Commission, in that part 
of its report which deals with the work of con- 
tract miners, concludes that the annual earnings 
of contract miners, "based upon returns for the 
year 1901, range between $550 and $600. Per- 



WAGES 149 

haps it would be safe to put the average at $560." 
(P. 50.) 

In order to illustrate the type of situation upon 
which this conclusion was based, the next two 
paragraphs of the report contain two illustrations, 
from the Lehigh Valley and the Lehigh and Wilkes- 
Barre Coal Companies, " whose work seems to 
have been conducted as regularly and systemat- 
ically as any in the region." (P. 50.) 

"The reports of these two companies included 
only such miners as worked in their respective 
collieries throughout the year, and whose names 
appear, for some days at least, on the payrolls of 
each month in the year." (P. 50.) The Lehigh 
Valley figures show annual earnings ranging from 
$667 to $465 and averaging $568 per year, or 
$2.41 per day. The average number of days 
worked was 236. The figures for the Lehigh and 
Wilkes-Barre Company show annual earnings 
ranging from $686 to $451. The average annual 
earnings were $589 and the average daily earnings 
$2.47. The number of days worked was 238. 
These two sets of figures correspond very closely 
and lead to the conclusion that in 1901, a year of 
236 working days, yielded average annual earnings 
of about $575. 

With these figures in mind, the Commission 
decreed that 10 per cent advance be given to all 
contract miners. In addition to this 10 per cent, 
the sliding scale provided for 3 or 4 per cent 
annually. 

An attempt will be made, on the basis of the 



150 ANTHRACITE 

figures on which the award of 1912 was based, to 
show what changes occurred in the purchasing 
power of the miners' wage from 1913 to 1914. 
The $575 base, representing 236 working days 
in 1901, must be increased, for 1903, by 14 per cent 
increase in wages. At the same time, for the 
whole anthracite region the number of days 
worked in 1903 was only 206, or 12.7 per cent less 
than the basis adopted by the Commission. The 
earnings figure for 1903 would therefore be $571.25. 
Accepting this figure as a base, and calling it 100, 
the earnings for subsequent years, weighted in 
proportion to the number of days worked, and to 
the percentage added to the wages by the changes 
in the sliding scale, appear in Column two of the 
following table. In the next column are the figures 
of the United States Department of Labor, show- 
ing the increase in food prices. The last column 
is the ratio between wages and food prices, or 
real wages in terms of food. 

It must be noted that the price of food has 
increased faster than the prices of the other 
things the worker buys, though how much faster 
no one can say accurately. Expressed only in 
terms of food prices, the real wages of the con- 
tract miners have been decreased during recent 
years, in spite of the increase in the wage rate and 
of the number of working days. No statements 
can be made about the wage of the other anthra- 
cite workers, for, despite the fact that they are in 
a large majority, and that their wages are much 
lower than the wages reported for the contract 



WAGES 151 

miners, little attention was paid to their wage 
situation by the Anthracite Strike Commission, 
and the data regarding them are meager. 

Table XII.— Estimates of Average Annual Earnings, 

Price Index and Real Wages of Anthracite Miners, 

1903 to 1914. 

Price 
Estimated Index, 
Average North 
Annual Atlantic Real 
Earnings States. Wage 
of Weighted or Pur- 
Contract i>er Con- chasing 
Miners sumption Power 

1903 100 100 100 

1904 97 102 95 

1905 106 101 105 

1906 95 105 90 

1907 107 109 98 

1908 97 111 87 

1909 100 115 87 

1910 117 119 99 

1911 126 119 106 

1912 118 131 90 

1913 132 137 96 

1914 117 140 83 



Although there are no satisfactory wage figures 
for the great body of the anthracite workers, if 
the position of the contract miners is any indica- 
tion of that of the other anthracite workers, they 
have failed, in spite of the immense expenditure 
of time and effort and money on the organization 
and upkeep of the union, to get an increase in 
wages equal to the rising cost of food, and pre- 
sumably to the cost of living at large. 



152 ANTHRACITE 

11. A Fair Anthracite Wage 

Each anthracite worker may justly ask for a 
wage that will buy a decent living for him and for 
a family of reasonable size. This is the minimum 
of fair wages. 

In addition to the minimum wage, based on the 
cost of a decent living, the contract miner, the 
mine laborer and such other men as are subject to 
unusually great risk, should receive a wage that 
recognizes the extra hazard of their occupations. 
In the case of the contract miners, it is evident 
that this extra compensation for risk should be 
considerable. 

Beyond these considerations, the amount of 
skill demanded and the disagreeableness of the 
work should exercise a determining influence in 
fixing a fair wage. 

Assuming that the wage decreed by thelAnthra- 
cite Strike Commission was a fair wage, all groups 
of anthracite workers are entitled to a very consid- 
erable increase in wages, based on the great 
increase in the cost of living since 1903. In 
deciding the extent of this increase, the greater 
number of days worked each year, during the last 
few years, should be taken cognizance of. 

Should the foregoing statements regarding a 
fair wage be accepted as substantially sound, the 
figures cited in this chapter, though obviously 
incomplete, make it clear that,Uooked at from 
any standpoint, the anthracite workers are en- 
titled to a material increase in wages. 



""V 



CHAPTER 5. 

THE PROFITS OF THE OPERATORS 

1. The Era of Small Profits 

The anthracite field has always been profitable 
in two senses: First, the product has a wide 
market that has been growing steadily from 
year to year; second, in this, as in any other 
hidden resource, the owner may, and frequently 
does, " strike it rich." If the question of profits 
is faced from either side, anthracite is a profit- 
able business. 

During the early years of anthracite produc- 
tion the market was strictly limited by the limited 
transportation facilities. Coal was a heavy com- 
modity that could be carried only by water. 
Until the railroads entered the field there could 
be little general sale for the product. The coming 
of the railroads with the rapidly widening market 
which they offered led to an era of specula- 
tion in coal lands, and of energetic efforts on 
the part of the anthracite railroads to secure 
large coal areas. Under the spur of these 
speculative and monopoly activities, coal prop- 
erties were bought at prices on which profits 
could not possibly be made. During the periods 
of feverish buying and leasing by railroad inter- 
ests of anthracite property, agreements were 

(153) 



154 ANTHRACITE 

entered into that were plainly opposed to sound 
business procedure. 

The Reading interests, which were leaders in 
„ the later efforts to establish a control in the 
anthracite fields, went on the rocks in the dev- 
astating industrial storm that struck the United 
States in 1892 and 1893. The Reading had 
bought in large, undeveloped tracts of coal land; 
it had assumed onerous business obligations in its 
efforts to secure control of other railroad interests. 
It had overstrained its credit at a time when 
credit was being restricted. Although the Read- 
ing properties were of immense potential value, 
they could not be realized on immediately. The 
financial crash came and the fate of the Reading 
interests was temporarily sealed. 

The period was one of readjustment. Busi- 
ness was still highly competitive and chaotic. 
Among business men generally there was mani- 
fested little of that feeling of group solidarity 
which they have since displayed. The industrial 
world was still a big game, which every man 
played for himself. 

The competitive fever had played havoc with 
the interests of the anthracite coal owners. 
Under its spur, agreement after agreement in the 
anthracite field had been abandoned or dissolved. 
The producers had a vague understanding of 
their mutual interests, but it was insufficient in 
extent to down the competitive impulse. 

The sweep of the 1893 panic taught American 
business men a lesson. Competition, instead of 



r 



PROFITS 155 

being the life of trade, was in reality the death of 
trade, because it was the death of tradesmen. 
Competition was dangerous in the extreme to all 
concerned. The successful rival suffered with the 
vanquished. 

The period from 1893 to 1898 was a dismal 
story of industrial hardship. Times were bad. 
Orders were light. Collections were poor. Credit 
was shaken. The whole industrial world paused 
in its onward rush. 

The anthracite business was affected as severely 
as most others. Prices dropped to impossibly 
low figures. Men worked their collieries at a 
loss in order to keep their places in the market. 
The anthracite railroads cut or passed dividends. 
Capitalized at high figures, struggling with en- 
cumbering fixed charges in the shape of bonded 
debt, lease obligations and the like, the anthra- 
cite operators passed through a period when 
profits were meager indeed. 

These hard times in the anthracite coal field 
were in part due to the country-wide industrial 
depression and in part to the hit-or-miss fashion 
in which the anthracite trade had been conducted. 
The operators had displayed little regard for one 
another. They had fought when they should 
have signed truces. They had engaged in price 
wars at a time when they might have been 
reaping monopoly profits. 

The lesson of the long industrial depression 
that ended with the boom year of 1898 was 
unavoidable. Co-operation paid. ' ' Mutual help- 






156 ANTHRACITE 

fulness' ' was a formula far superior to " every 
man for himself." If profits were desired in 
the anthracite field or in any other field, there 
was only one thing to be done — those interested 
in the anthracite coal fields must learn the ele- 
ments of team work. 

The result to the American business world of 
this famous lesson of the nineties was an effec- 
tive spirit of combination that brought people 
together. Since that co-operative spirit took 
possession of the anthracite field the industry 
has been profitable. 

2. Making Anthracite Profitable 

Since the formation of the anthracite com- 
bination in 1898 the anthracite industry has 
paid. Even in hard years dividends have been 
regular and surpluses have been laid by with 
unfailing regularity. 

Table XIII. — The Average Wholesale Price of Stove 
Coal at New York Harbor, 1890-1904. 1 





First Period 


Second Period 


1890. 


$3.71 


1898 


$3.80 


1891. 


3.85 


1899 


.... 3.70 


1892. 


4.15 


1900 


.... 3.95 


1893. 


4.19 


1901 


. ... 4.32 


1894. 


3.60 


1902 


4.46 


1895. 


3.13 


1903 

1904 


4.82 


1896. 


3.79 


. ... 4.82 


1897. 


4.01 













i Bulletin 149, United States Bureau of Labor, p. 135. 



PROFITS 157 

The men behind the combination of 1898 saw 
that the chief thing necessary for the financial 
prosperity of the anthracite fields was a higher 
price for anthracite products. Between 1898 
and 1903 this higher price became a reality. The 
movement in the price of stove coal illustrates 
the point. 

The figures in the First Period give an idea of 
the price movements up to the formation of the 
combination. The figures show astonishingly 
sudden changes. The price was at $4.19 in 1893 
and at $3.13 in 1895. By 1897 the price was up 
to $4.01. When the fact is borne in mind that 
these are wholesale prices in a staple product, 
some idea can be formed of the instability of the 
anthracite business during those hard years. 

Stove coal prices touched rock bottom in 1895 
($3.13). The combination of 1898 found prices 
at the level they had occupied in 1890 ($3.71), 
when the Reading interests were attempting to 
control the field. 

The Second Period chronicles the success of the 
anthracite combination of 1898. Under the im- 
petus of this co-operative venture, prices rose from 
$3.80 in 1898 to $4.82 in 1903. At that figure 
they continued until 1912, when they went to $5.06. 

The jump in the price of anthracite was sud- 
den, and was not in any sense parallel to the 
general rise in the cost of living that was taking 
place at the same time. The United States Bureau 
of Labor (Bulletin No. 140, page 11) reports an 
increase in food prices between 1898 and 1903 of 



158 ANTHRACITE 

15 per cent. During the same period anthracite 
prices rose 27 per cent. From 1903 to 1912, 
while food prices increased 34 per cent, the price 
of anthracite remained stationary. 

The rapid jump in hard coal prices between 
1898 and 1903, and the stability of prices after 
that date, is evidence of the existence of a com- 
bination to control price movements. Professor 
Jones (pp. 160-61) clinches the point by point- 
ing out the manner in which the price increases 
were brought about. 

"The advance in 1902 was made in October, 
the various companies putting out a uniform 
schedule of monthly prices for the prepared sizes 
of coal, averaging about 50 cents higher than the 
previous prices. The schedule for stove, egg, and 
chestnut was $5 per ton at the terminal points 
nearest the city of New York, and 5 cents less 
at the terminal points farther away. These 
uniform advances in the price of coal were put 
out at the same time, after consultations among 
the presidents of the railroads or their coal com- 
panies, each of whom was aware of the price 
which the other companies were to charge. 
President Truesdale of the Lackawanna testified 
in 1908 that the advance in the circular price 
of the Lackawanna in 1902 was made by the 
officers of the coal sales department of the rail- 
road after consultation with him. 

"President Thomas, when asked with whom he 
consulted in the fixing of the price in 1902, re- 
plied, 'I do not recollect now. I think probably 



PROFITS 159 

I consulted with Mr. Baer; very likely I asked 
Mr. Truesdale what he was going to do. I know 
I asked Mr. Walter what he was going to charge 
for coal.' It is significant that this considerable 
advance in the price of the prepared sizes of 
anthracite, made by the presidents after con- 
sultation, remained in force until 1912, with the 
exception of the omission of the April discount in 
1906 on account of the suspension of mining 
operations in April of that year." 

The anthracite combination, through concerted 
action, increased the price of coal between 1898 
and 1903 by an amount sufficient to yield hand- 
some returns in the form of earnings, dividends 
and surpluses. This statement may be sub- 
stantiated in a number of ways. 

Take first a single illustration. "The report 
of the Lackawanna Railroad for 1903 showed 
a net profit on the sale of coal of over $3,000,000. 
This was 85 per cent greater than its profit in 
1901. When asked before the Interstate Com- 
merce Commission whether he attributed 'that 
gain of 85 per cent in profit very largely to the 
excess of the new price over the increased cost 
of mining,' President Truesdale answered, 'That 
had considerable to do with it, of course.' "* 

Another measure of the effect of the price 
increase may be seen in the increase of dividends 
declared by the anthracite carriers. 

The production of coal was increasing. In 
the years from 1895 to 1899 the total produc- 

1 "The Anthracite Coal Combination," op. cit., p. 158. 



160 ANTHRACITE 

tion of anthracite varied from 41,637,864 tons 
(1897) to 47,665,204 (1899). (Mineral Resources, 
1913, Part II, p. 889.) In 1897 the mines worked 
only 150 days; in 1899, 173 days. (Mineral 
Resources, 1913, Part II, p. 753.) Between 1900 
and 1904 the production moved up from 45,000,000 
to 57,000,000 tons; the days of operation from 
166 to 200. , Note how this increase of 27 per cent 
in production compares with the increase in 
dividends. 

The year 1898 shows dividends as follows: 

Central Railroad of New Jersey 4 per cent 

Lackawanna 7 " "■ 

Delaware and Hudson 5 " " 

Pennsylvania Railroad 5 " " 

Lehigh Coal and Navigation Company. . .4 " " 

By 1903 a transformation had occurred. The 
dividend of the Jersey Central rose from 4 to 8 
per cent; the Delaware and Hudson, from 5 to 
6 per cent; the Pennsylvania, from 5 to 6 per 
cent; and the Lehigh Coal and Navigation, from 
4 to 6 per cent. The next year, 1904, shows a 
slight increase in dividends, and in 1905 the 
dividends declared were as follows : 

Reading Company 3^ per cent 

Central Railroad of New Jersey 8 " 

Lehigh Valley 4 " 

Lackawanna 20 M 

Delaware and Hudson 7 " 

Pennsylvania 6 " 

Ontario 4£ " 

Lehigh Coal and Navigation Company. . . 8 " 

Philadelphia and Reading 20 " 



PROFITS 

*1 

In 1898 the Reading Company, the Lehigh Valley, 
and the Ontario had declared no dividends. The 
dividend situation in 1905 was eminently 
satisfactory. 

The price schedules adopted in 1903 proved 
profitable, from the standpoint of dividends, up 
to 1912, when the next price increase occurred. 
Thus in 1911 the dividend rates were: 

Reading Company 6 per cent 

Central Railroad of New Jersey 12 

Lehigh Valley 10 

Lackawanna 55 1 

Delaware and Hudson 9 

Pennsylvania 6 

Ontario 2 

Lehigh Coal and Navigation Company 8 

Philadelphia and Reading 15 

The story told by the dividend rates is clear 
and emphatic. The price schedules which the 
combination of 1898 was able to establish in 
1903 proved highly remunerative over a series of 
years, some of which were prosperous and others 
unprosperous. During good and bad years alike 
the dividend payments of the anthracite roads 
have been eminently satisfactory from the stand- 
point of the investor. 

3. Anthracite Profits and Railroad Profits 

The difficulty of analyzing anthracite profits is 
enhanced by the baffling relation which exists 
between the costs of producing and of trans- 

1 Thirty-five per cent in extra dividends. 
11 



v ^ ANTHRACITE 

porting anthracite. Where the mining and the 
carrying of coal are under the same management, 
the carriers have for years followed the policy of 
operating the mines at a slight profit, or even at a 
loss, while the chief profits went to the railroads. 

There is little question regarding the extent of 
the railroad control in the coal fields. 1 Professor 
Jones begins his chapter on "The Transportation 
of Coal" with this statement: "The railroad coal 
companies, including the coal departments of the 
railroads mining coal directly, control over 90 
per cent of the total output of anthracite coal. 
These companies, in turn, are controlled by the 
eight important anthracite carriers." 

When the coal companies controlled by the 
railroads pay freight, they really pay it to them- 
selves. It is therefore a matter of little conse- 
quence what the amount of that freight rate is. 
A profit is to be recorded somewhere, and no 
one cares particularly whether it is recorded on 
the books of the coal company or the railroad 
company. When an independent coal operator 
pays freight, he pays it to a railroad in which 
he has no concern. Under the circumstances, 
the manipulation of freight rates has been one 
of the favorite means of controlling the inde- 
pendent operators. The railroads, in reaching 
out for an increased control over the coal fields, 
have adopted this as one of the most workable 
methods for discriminating in favor of the com- 
panies representing their own interests. 

1 "Arbitration in the Coal Industry," op. cit., p. 228-29. 



PROFITS 163 

The relation existing between coal mine profits 
and railroad profits is thus explained by Dr. 
Jones: "A high freight rate reduces the profit 
in marketing coal independently, and in the past 
has offered a strong inducement to the inde- 
pendent operator to sell his coal under contract 
to the railroad or its coal company (and this is, 
no doubt, the raison-d? etre of the high freight 
rate). | But even including the coal formerly sold 
under a perpetual contract, but now released by 
the order of the Supreme Court declaring these 
contracts illegal, only about 20 per cent of the 
output is affected by the freight rate, and this 
percentage is certain to become less and less, 
regardless of whether the freight rate be high 
or low. The freight rate, however, will become 
of importance, should the present attempts on 
the part of the government to divorce the busi- 
ness of transportation and mining meet with 
success. Inasmuch as Very few of the railroad 
coal companies now return a surplus of earnings 
above expenditures, even with the present high 
price of coal, were these coal companies to become 
independent of the railroads, most of them, unless 
they could advance the price of coal still higher, 
would be compelled at the present anthracite 
freight rates to go out of business. " (P. 145.) 

The result of this policy has been the establish- 
ment of freight rates on coal that are generally 
considered to be abnormally high. The inde- 
pendent operators have made repeated attacks 
on these freight rates, alleging they are one of 



154 ANTHRACITE 

the chief forms of abuse practiced by the dom- 
inant interests in the anthracite region. 

The freight rates on anthracite to tidewater 
ports are quite uniform. Thus the Erie, New 
York, Susquehanna and Western, Ontario, and 
Central of New Jersey, charge $1.60 per ton for 
prepared sizes from all mines to tidewater in the 
vicinity of New York. The Lackawanna rate is 
$1.58, Reading $1.55, Lehigh $1.55, and Penn- 
sylvania $1.40. A similar uniformity prevails 
in the case of pea and buckwheat sizes. 1 

The Interstate Commerce Commission has 
prepared an elaborate report on the cost of carry- 
ing this coal on the Central Railroad of New 
Jersey. "It was found that the total operating 
cost (including the cost of returning the empty 
cars to the mines) was 59.26734 cents per ton 
from the Wyoming region to tidewater; 44.35119 
cents from the Lehigh region; and 49.03914 
cents from the Upper Lehigh region." 2 The 
freight charges on this coal to Port Elizabeth 
and Port Johnson are: Prepared sizes, $1.55; 
pea coal, $1.40; and buckwheat No. 1, $1.20. 
"If we give to the freight rate in each of these 
groups the weight to which each is entitled by 
virtue of the actual shipments, we arrive at an 
average freight rate for the Central of New Jer- 
sey of $1.40 per ton. The cost of carrying such 
coal to tidewater from the Wyoming region is 
less than 60 cents; from the Upper Lehigh region, 

1 "The Anthracite Coal Combination," op. cit., p. 134. 

2 Ibid., p. 135-36. 



PROFITS 165 

less than 50 cents; and from the Lehigh region, 
less than 45 cents. On shipments from this 
last region, therefore, the freight rate exceeds by- 
more than three times the actual operating cost. 
This cost, it should be clearly borne in mind, is 
merely operating cost. It does not include any 
return on the investment." 1 

Similar figures were secured in Pennsylvania 
for the Public Service Commission by Price, 
Waterhouse & Co. These figures show the cost 
of "transporting anthracite coal from the respec- 
tive mining sections in the eastern part of Penn- 
sylvania to Philadelphia/ ' The report was sub- 
mitted January 1, 1914. The Price- Waterhouse 
report shows that for the year ending May 31, 
1913, the cost of transporting anthracite on the 
Reading Railway was: from the Schuylkill field, 
44.698 cents; the costs on the Pennsylvania 
were 61.043 cents by one route and 54.378 
by another. These costs are operating costs, 
and make no allowance for the payment of 
fixed charges. 

The margin between the cost of carrying the 
coal and the freight rate charged for the trans- 
portation is considerable. The average freight rate 
on the Philadelphia and Reading from the mines 
to Philadelphia is $1.55. 2 Since the operating 
cost of carrying anthracite coal from the Schuyl- 
kill region to Philadelphia is less than 45 cents, 
the freight rate in this instance is more than three 

1 "The Anthracite Coal Combination," op. cit. t p. 136. 

2 Ibid., p. 138. 



166 ANTHRACITE 

times as great as the operating cost of trans- 
portation. 1 

Professor Jones illustrates the profitableness of 
carrying anthracite coal on such a relation between 
operating cut and freight rate by citing the case 
of the Lehigh Valley. While it derives a large 
part of its total traffic from anthracite coal, its 
rates are among the lowest charged. During 
"the fiscal year 1913 the Lehigh carried 14,732,949 
gross tons of anthracite. Its gross earnings from 
the transportation of this coal were $18,556,161, 
whichjwas over 50 per cent of its gross freight 
receipts, and 43 per cent of its total operating 
revenue. Its gross earnings per net ton per 
mile from the carriage of anthracite coal were 
7.11 mills, and from all other freight 5.67 mills, 
or 25 per cent greater for anthracite. Were we 
to assume that the ratio of operating expenses to 
gross earnings was the same on anthracite as 
on all its traffic (67.62 per cent), the operating 
expenses chargeable against the transportation 
of anthracite would be $12,547,676 and the net 
earnings $6,008,485, or nearly 41 cents for each 
ton of anthracite hauled. But as it costs less per 
ton to move anthracite coal than general freight, 
the net earnings are even greater than this figure." 2 

Often it is hard to distinguish between the 
production costs and the transportation costs on 
anthracite. The facts suggest strongly, however, 



1 The Price- Waterhouse Report is in the form of a 63-page pamphlet con- 
taining the full statement of the method used in the making of calculations. 

2 "The Anthracite Coal Combination," op. cit., pp. 138-39. 



PROFITS 167 

that freight rates on anthracite are fixed, not with 
relation to the cost of transportation, but on the 
basis of "all that the traffic will bear." The 
control of both production and transportation 
facilities enables the owner of the properties to 
make splendid returns on the investment. 

4. Anthracite Prosperity 

During the past decade the anthracite roads 
have enjoyed a surprising degree of prosperity, 
which has been as persistent as it has been gen- 
erous. There are several ways in which this 
prosperity may be measured. First, there are the 
earnings of the railroads; second, the dividends; 
third, the surpluses; and fourth, the stock ratings. 
All four measures give a very definite idea of 
prosperity. 

For the year 1913 the earnings on the common 
stock of the principal anthracite carriers, after 
the payment of all expenses, including fixed 
charges and preferred dividends, were: 1 

Reading Company 17.57 per cent 

Central of New Jersey 26. 73 

Lehigh Valley 16.90 

Lackawanna 32 . 04 

Delaware and Hudson 12 . 95 

Pennsylvania 8.86 

Erie 3.67 

Ontario 2 . 08 

Lehigh Coal and Navigation Company . 8.93 

The last normal year of railroad operations is 
1913. The business conditions in that year 

1 "The Anthracite Coal Combination," op. cit., p. 140. 



168 ANTHRACITE 

were below, rather than above, those of the 
ordinary year. The war conditions prevailing 
during 1914 make the figures for that year dis- 
tinctly non-representative. 

Some comment has already been made on the 
dividends declared by the anthracite carriers. 
There seems to be some relation between the 
proportion of anthracite business to total business 
and the prosperity of the railroad. The Central 
of New Jersey, drawing nearly half of its freight 
revenues from anthracite, has been paying from 
8 to 12 per cent for a dozen years; the Lehigh 
Valley, the Lackawanna, and the Delaware and 
Hudson, with almost exactly half of their freight 
revenues derived from anthracite, have been 
able to pay regular dividends of from 4 to 20 
per cent. At the present time, the Lehigh Valley 
is on a 10-per-cent basis, the Lackawanna on a 
20-per-cent basis, and the Delaware and Hudson 
on a 9-per-cent basis. The Ontario and the 
Erie, with respectively two-thirds and one-third 
of their freight revenues derived from anthracite 
traffic, are not in the dividend-paying class. 
The continued payment of these large dividends, 
year in and year out, is an excellent index of 
prosperity. 

Another prosperity measure is the surpluses 
which the railroads are able to lay by. Thus 
the Lehigh Valley had no surplus in 1902. "By 
1909 it had a surplus of $19,200,000, in 1910 this 
surplus had risen to $27,000,000, and by 1911 to 
over $30,000,000. In 1912, largely because of 



PROFITS 169 

the payment of the extra dividend of 10 per 
cent, the surplus declined to $23,400,000, but in- 
creased in 1913 to $25,000,000. The operations 
of the Lehigh Valley since 1904 have thus been 
highly profit able." 1 

The prosperity of business enterprises is re- 
flected, with a degree of fidelity, in the ratings 
which their securities enjoy in the stock market. 
Since the organization of the combination in 
1898 there has been a strong upward movement 
in the stocks of the anthracite carriers. 

Professor Jones has worked out a careful state- 
ment of the stock values of the anthracite roads 
since the formation of the combination of 1898. 
He bases his figures on "the average of the high- 
est and the average of the lowest market quota- 
tions of the common stock of the eight important 
anthracite roads." He writes: "In 1898, the 
year when the beginnings in the development of 
the combination were made, the average of the 
highest prices at which the stocks of these roads 
sold was $76, and the average of the lowest was 
$63. From 1898 until 1909 there was an almost 
steady advance in the prices at which these 
securities were quoted. In 1909 the average of 
the highest quotations was $231 and the average 
of the lowest was $167. The high average in 
1909 was partly in sympathy with the general 
high level of stocks in that year and partly in 
anticipation of the payment of an 85 per cent 
dividend by the Lackawanna Railroad. The 

*"The Anthracite Coal Combination," op. cit., p. 139. 



170 ANTHRACITE 

declaration of stock dividends by the Lacka- 
wanna and the Lehigh Coal and Navigation Com- 
pany in 1909 explains a part of the decline in 
1910 of the average of the highest market quota- 
tions, and likewise the drop in 1911 is partly 
explained by the privilege given in 1910 to stock- 
holders of the Lehigh Valley to subscribe at par 
to $20,000,000 of new stock worth $125 per 

share at its lowest quotation 

On the whole, therefore, it is clear that the forma- 
tion of a combination, the maintenance of the 
freight rates at their high figure and the frequent 
advances in the price of coal have made the 
anthracite business a particularly profitable one." 1 
Measured in any terms, anthracite profits have 
been most generous since the formation of the 
combination of 1898. Earnings, dividends, sur- 
pluses and stock ratings all reflect the prosperity 
of the railroad interests that control the anthra- 
cite industry. During the past fifteen years, 
whether times were prosperous or unprosperous, 
the anthracite carriers have been earning most 
substantial returns on the anthracite business. 

5. Are Anthracite Profits Too High? 

The $7 paid by the consumer for a ton of coal 
goes to the miner, the producer, the carrier, and 
the retailer. The miner gets about $1.80; the 
railroad company a like amount; there is the 
cost of up-keep and of selling the coal, before 
it comes to the retailer. Can the profits made 

1 "The Anthracite Coal Combination," op. cit., p. 141. 



PROFITS 171 

by the anthracite interests on the mining of coal, 
the selling of coal and the transportation of coal 
be regarded as excessive? 

Judged in terms of results, the question cannot 
be handled in the same way for all of the roads. 
To the Erie, for example, the anthracite combina- 
tion has not brought prosperity. On the other 
hand, the Lackawanna is a remarkable example 
of the effectiveness of a conservative financial 
policy, a far-seeing and intelligent business policy 
and a well-controlled natural resource monopoly. 
Lackawanna profits are things to conjure with in 
the financial world. 

There is a wide difference between the profits 
made by individual roads. At the same time, 
the profits of the anthracite railroads as a group, 
since the effective combination of 1898, have 
been uniformly high. The common stock divi- 
dend paid by ten anthracite carriers in 1914 
averaged 9.1 per cent. 

The representatives of the Reading, the Lehigh 
Valley, the Lackawanna and the other patently 
prosperous anthracite roads are quick to insist 
that the profits are not excessive. The reply 
reaches back into the old problem of monopoly, 
and raises the question: "Upon what basis shall 
the reasonableness of profits be determined ?" 

Take first the most flagrant case — that of over- 
capitalization. One company, like the Reading 
in the early nineties, starts a campaign to secure 
control of the major portion of the anthracite 
field. In order to achieve this result, it resorts 



172 ANTHRACITE 

to a number of practices. First, it guarantees 
a company which it wishes to absorb, 7 per cent 
dividends on its capital stock. This 7 per cent 
thereupon ceases to be profits and becomes a 
fixed charge. 

The distinction between 7 per cent as profits 
and 7 per cent as guaranteed dividends is im- 
portant. A company in the course of its opera- 
tions is able to earn and pay 7 per cent on its 
stock each year for eight years. A lean year 
ensues. The dividend is cut to 5 per cent and 
kept at that figure until times become more pros- 
perous. Under such circumstances the dividend 
payment rises and falls with the prosperity of 
the business. 

Suppose, on the other hand, that a 7-per-cent 
dividend is guaranteed by a leasing company. 
Through good and bad years alike the dividend 
must be paid. To meet this obligation a large 
surplus is carried over from good years. The 
7 per cent guaranteed is a fixed charge of the 
same nature as an interest charge. The moment 
its payment ceases the company faces legal 
proceedings. 

A guaranteed dividend may be reasonable at 
one time and unreasonable at another. The 
right of the railroad to earn 6, 7 or 8 per cent 
in 1910 and 1912 was scarcely questioned; but 
when the hard times of 1913 and 1914 came on, 
the same earnings were looked upon as unreason- 
able. The whole country was in the grip of a 
business depression. Everyone was suffering 



PROFITS 173 

more or less, and the demand of the railroads 
that they be allowed to increase rates and fares 
at the same time that they were paying their 
usual dividends seemed anything but fair to a 
greater portion of the population. 

The promoter of an anthracite combination 
might very conceivably guarantee a dividend of 
7 per cent on a property that could earn but 
5 per cent. Such a profit would undoubtedly be 
excessive. 

Overpayment may take another form. An 
anthracite producer decides to sell out. His 
property is bid for by a number of industrial 
leaders. The man who sells the property knows 
that, at present coal prices, it is worth only 
$3,000,000. The buyer expects prices to rise in 
the near future, and gambling on this possibility, 
he pays $5,000,000 for the property. Previous 
to the sale, the property was earning $180,000 a 
year (6 per cent) . The same amount equals less 
than 4 per cent on a $5,000,000 capitalization. 
What may the new owner say to the consumer? 

Suppose he should make this statement: "I 
bought this property for $5,000,000 and paid cash 
for it. It is an investment of my entire wealth. 
Six per cent is not an unreasonable return on an 
investment. I believe that I have a right to 6 
per cent, and I propose to raise prices until the 
property is earning $300,000 instead of $180,000 
a year." 

Such a statement would be out of the question 
in a competitive industry. Under competition 



174 ANTHRACITE 

the lowest bidder sets the price, and if a man is 
so foolish as to pay for a business more than it 
is worth, he suffers the consequences. In the 
anthracite industry, however, the element of 
monopoly enters. Shall a plea which would be 
absurd under a system of competition be admitted 
under a system of monopoly? 

There is, of course, no end to the possibilities 
of the case. If it is possible to pay $5,000,000 
for the property and raise prices until they yield 
a $300,000 profit, why not pay $10,000,000 for 
the property and raise prices until they yield 
$600,000? The matter is thus easily reduced to 
the absurd. 

The argument cannot be carried to its logical 
conclusion without appearing ridiculous. Where, 
then, is the stopping place? Obviously, there is 
none. So long as anthracite land may change 
hands at increased prices, so long will promoters 
and speculators anticipate price increases by 
offering more for tjie land at each successive trans- 
action. The new buyer, having paid a larger 
price, will come before the people with the old 
plea: "I put my good money into this venture. 
Haven't I a right to 6 per cent on my invest- 
ment ?" Unlike the consumer, he is not forced 
to think seriously about the high price of coal. 

The customary business transactions in a 
monopolized natural resource will lead, inevitably, 
to increased financial obligations that must result 
finally in higher prices. Even in the absence of 
speculation and rash, unintelligent buying, this 



PROFITS 175 

will be true. How much more will it be the 
case when the monopoly power which the resource 
possesses is eagerly sought after by groups of 
men aiming to secure wealth and business control ? 

There is another issue which must be con- 
sidered as an essential part of the problem of 
determining the sufficiency of profits. This 
second issue is raised by the increase of land 
values. 

A mine expert discovers coal. His employers 
buy the land at $100 an acre and sell it at $200 
to a mining company. This mining company 
does not begin operations at once. A dozen 
years pass before the first coal is taken from the 
ground. Meanwhile, the demand for coal has 
increased. The supply has diminished and the 
land is now worth $600 an acre instead of $200. 
The question is raised as to a reasonable profit 
on the coal. Twenty dollars a year is a 10-per- 
cent return on the purchase price. It is only 
3 per cent on the present value. Sixty dollars is 
only 10 per cent on the present value, but it is 
30 per cent on the original price. 

Shall an increase in land values be regarded 
as an equitable basis for profits? Land value 
increase is due to the activity of the community. 
No one person is responsible for increased land 
values. The presence of population, the growth 
of commerce and industry, new discoveries and 
all of the forces that constitute a growing civiliza- 
tion make for increased land values. The indi- 
vidual made an investment of $200 in coal land. 



176 ANTHRACITE 

The community has trebled the value of the land 
by its activities. 

The situation is grave. Transfers of property 
and speculation, on the one hand, and rising 
land values, on the other, provide the pretext for 
a constant increase in prices. For the consumer, 
relief is in sight along neither of these lines. 

So long as increased land values may be capital- 
ized as a basis for profits, so long as a buyer may 
allege the purchase price as a reason for the 
return that he is receiving, there is no limit to 
the amount of profits that the coal land owners 
may make on their anthracite properties. The 
consumer will find, added to the price which he 
is expected to pay for his coal, a steadily increas- 
ing amount, representing the monopoly power of 
the coal land owners. 

Under the present system of estimating profits 
there is no possible basis for determining the 
adequacy of profits. The profits now being made 
by the coal owners, if calculated in terms of the 
present value of the anthracite land, perhaps are 
not excessive. If calculated in terms of the cost 
of the same land fifty years ago, they would be 
grotesque. A generation hence, under the pres- 
ent system of resource ownership, the anthracite 
coal lands may be worth, per acre, twice what 
they are worth today. Suppose that they were. 
Then the present-day profit of, let us say 8 per 
cent, would be reduced to 4 per cent. Surely, 
that is not a fair return on the investment ! The 
logic of the situation will require the addition 



PROFITS 177 

to the price of the coal of an amount sufficient 
to continue the payment of 8 per cent; and this 
procedure will be followed in the face of the fact 
that the increase in the value of the property is 
due solely to the activities of the community, 
and of the further fact that during half a century 
the owners of the coal land have made net profits 
equal to many times the original purchase price 
of the land for mining purposes. 

The profits made by the anthracite owners 
are clearly far in excess of the "cost of produc- 
tion plus a reasonable profit" idea, on which the 
statement of fair profits is ordinarily based. At 
the same time, since the cost price of the prop- 
erty to its present owners plus the rise in land 
value which has occurred since the purchase, may 
be taken into consideration, the term "reason- 
able profit" means nothing because of the lack 
of a stable base on which the reasonableness of 
profits may be calculated. 



12 



CHAPTER 6 

A CONCRETE EXAMPLE THE CONFLICT OP 1912 

1. The Apparent Advantage of the Operators 

The evidence presented thus far, dealing with 
prices, wages and profits, would lead to the gen- 
eral conclusion that the operators have the best 
of it. The consumers are paying more for their 
product; the workers are fortunate if they keep 
pace with the rising cost of living. The oper- 
ators, since the effective combination of 1898, 
exhibit every ear-mark of prosperity. 

The general facts seem to favor the operators. 
Specific instances afford excellent illustrations of 
the way in which their monopoly power has 
been turned to excellent advantage. 

Shortly after the formation of the anthracite 
combination in 1898, two increases in wages were 
granted to the anthracite workers (1900 and 
1902). This increase in the labor costs was con- 
verted at once into higher prices. Furthermore, 
it was used as a pretext for additional advance in 
coal prices. Stove coal sold, wholesale, at $3.70 
in 1899, $3.94 in 1900, $4.32 in 1901, $4.46 in 
1902 and $4.82 in 1903. From 1903 until 1911 it 
remained at about $4.82. Since the settlement fol- 
lowing the strike of 1912 it has been about $5.06. 

The anthracite strike of 1902 gave the operators 
the real opportunity to advance coal prices. At 
the beginning of the strike (May, 1902) coal, with 

(178) 



THE CONFLICT 179 

the regular discount off, was selling at $4.02. 
By the end of the strike (November, 1902) the 
price was $4.95. From that time until 1913, the 
November price of anthracite remained at $4.95. 

To what extent was this advance justified by the 
increase in wages granted in 1900 and 1902? 

The question cannot be answered with absolute 
certainty. Professor Jones, commenting on the 
point, says (p. 158): "It is a difficult matter to 
make a wholly satisfactory estimate of the extent 
to which the higher price merely offsets an increase 
in the cost of mining, as this cost varies so much 
for the different companies, and in the different 
mines of the same company, and because of the 
difficulty of allocating to any one size, such as 
stove coal, for example, those elements in the 
expenses of mining which are properly chargeable 
to this one size — inasmuch as all sizes are produced 
together under joint cost." 

A few available figures, covering this early 
period, give some idea of the extent to which an 
increase in wages meant increased profits to the 
operators and increased prices to the consumers. 

Figures submitted by the Delaware and Hud- 
son Company to the Interstate Commerce Com- 
mission are summarized as follows : 

Payrolls 

Other 

Price than Cost of 

Received Office Mining 

1900 $3.20 $1.16 $1.43 

1901 3.57 1.24 1.54 

1902 3.87 1.46 1.93 

1903 4.10 1.53 1.96 



180 ANTHRACITE 

During four years the labor cost of the coal in- 
creased 37 cents (32 per cent), the entire cost of 
mining increased 53 cents (37 per cent), and the 
price received for all sizes of coal increased 90 
cents (27 per cent). On the face of things the 
operators were modest — raising the price only 27 
per cent, as compared with an increase in the total 
cost of mining of 37 per cent. Actually, the 
increase in cost was 53 cents and the increase in 
price 90 cents, leaving for the operator on each 
ton of coal sold, a net advantage of 37 cents. 

The increase in the price of anthracite from 
1900 to 1903 may be justified, in part only by the 
increase in wage rates. A large slice of the 
increase goes to increased profits. 

The same facts hold true for figures submitted 
in the Sherman Anti-Trust case by the Philadel- 
phia and Reading Coal and Iron Company. 
Mining costs, including wages, supplies, improve- 
ments and general expenses, rose from $1.59 in 
1899 to $2.20 in 1903— an increase of 61 cents, 
or 38 per cent. The price received for all sizes 
of coal rose from $1.84 to $2.63 — an increase of 
79 cents, or 43 per cent. In this case the price 
received actually rose higher in percentage than 
the percentage of increase in labor costs. 1 

Labor disturbances have been very successfully 
employed in late years by the anthracite opera- 
tors as a means of increasing coal prices. Public 
sympathy is won for the transaction by a simple, 
psychological trick. Wages were increased 10 

1 "The Anthracite Coal Combination," op. ciL, pp. 158-59. 



THE CONFLICT 181 

per cent in 1902. Is it not just and right that the 
operator should be able to make good this extra 
cost by an addition to the price of, let us say, 
10 per cent ? The statement is simple, nor does it 
occur to the ordinary consumer of coal that the 
increase in wages raised only the labor cost of 
the coal. The labor cost in 1902 was for one 
company (the Delaware and Hudson) $1.46. 
Ten per cent of this labor cost is 14.6 cents. The 
coal was selling at something over $5 to the 
consumer. Ten per cent of $5 is fifty cents. The 
10 per cent is the same in each case. The amount 
on which the percentage is taken varies so much 
in the two cases that more than three times as 
much money, on each ton of coal, is taken by the 
operator from the consumer as is given by the 
operator in the increased wages of the workers. 

2. A Typical Situation 

The most complete body of evidence bearing on 
the relation between increased labor costs and 
increased prices was collected by the United 
States Bureau of Labor in 1912. 1 There was a 
suspension of work; a sharp price increase in 
many sections, based on coal shortage; and a 
final settlement that gave the miners 10 per cent 
more wages, while it abolished the sliding scale, 
and raised the price of coal about 25 cents per 



1 "Increase in Prices of Anthracite Coal following the Wage Agreement of 
May 20, 1912." Prepared under the direction of the U. S. Commissioner of 
Labor by Basil M. Manly. House Document 1442, 62d Congress, 3d Session. 
A remarkably clear and detailed presentation of the case. 



182 ANTHRACITE 

ton. The case is typical of the relations between 
labor, capital and the consumer of anthracite. 

After a suspension lasting six weeks, an agree- 
ment was signed, May 20, 1912, under which the 
wages of the miners were increased, the price of 
coal was raised and the operators reaped a rich 
harvest of increased net profits. If the matter 
is examined in detail, it appears that the increase 
in wages was considerably less than the correspond- 
ing increase in the cost of living between 1903 and 
1912; that the increase in the price of coal to 
the consumer was considerably in excess of the 
increase in the cost of producing the coal; and 
that there was a marked increase in profit to the 
coal companies. As an outcome of this one situ- 
ation, labor was a net loser, the operators were the 
net gainers and the consumers paid the bill. 

The award of the Anthracite Coal Strike Com- 
mission made in 1903, had continued practically 
unchanged by the agreements of 1906 and 1909. 
Some marked alterations were brought about as a 
result of the conflict of 1912. 

The 1903 agreement provided for a wage pay- 
ment based on the wholesale price of coal at tide- 
water. "For each increase of 5 cents in the price 
of white ash coal, of sizes above pea coal . . . 
above $4.50 per ton, the employees shall have an 
increase of 1 per cent in their compensation." 
(Award of 1903, Sec. VIII.) Under the operation 
of this "sliding scale," the mine workers received 
an increase in wages over the minimum figure of 
4 per cent in 1903 ; and this percentage of increase 



THE CONFLICT 183 

varied from 1903 to 1911, when it was 4 J per cent. 
At its lowest, it was 3| per cent; at its highest 
(1912), 7 per cent. The average per cent of 
increase received by the mine workers under the 
sliding scale during the nine years of its existence 
was 4.2 per cent. 

The agreement of 1912 abolished the sliding 
scale, but in its place there was a provision for an 
increase of 10 per cent over the wage rates pro- 
vided for in the award of 1903. 

Following their agreement with the workers, 
the operators increased the wholesale prices of 
coal an average of 25.82 cents per ton. 1 This 
figure is secured by comparing the prices of coal 
in June, July, August and September, 1911, with 
the prices in the corresponding months of 1912. 
This increase in wholesale prices resulted in a cor- 
responding increase in retail prices and the con- 
sumers were compelled to shoulder the added 
burden. 

The operators explained that the increase in 
wholesale prices of coal was made necessary 
because (1) of the advance in wages resulting 
from the agreement of May 20, 1912; and (2) 
because of the increases in the cost of production 
which had taken place between 1902, the date of 
the last increase in the wholesale prices of coal, 
and 1912. These increases were caused by the 
growing difficulties of mining, by additional taxes 
and more stringent mining laws. 2 

*" Increase in Prices of Anthracite Coal," op. cit., p. 11. 
* Ibid., p. 12. 



184 ANTHRACITE 

The public discontent which was aroused by the 
higher anthracite prices led to an investigation of 
coal prices. The House of Representatives ordered 
the investigation which was made for the Commis- 
sioner of Labor by Mr. Basil M. Manly. The ma- 
terial secured in the course of this investigation 
furnishes the data on which this chapter is based. 

Mr. Manly was able to secure, through the 
Bureau of Labor, a large amount of information 
regarding the operations of most of the important 
anthracite companies. He reports furthermore, 
that "in every case the statistics presented by 
the companies have been checked as far as possible 
either against the books of the companies from 
which they were derived or against the public 
records of the company, the correctness of which 
have been certified by public accountants. ,,x 

The facts regarding wholesale prices include 
about 70 per cent of all the anthracite coal sold. 
The facts regarding cost of production include 
about 54 per cent of the entire output of the 
region. The Congressional report is therefore 
based on the facts furnished by the coal com- 
panies themselves; these facts were checked 
wherever possible against public records, and the 
material represents a majority of the business 
done in the coal regions. 

3. The Consumer in 1912 

The consumer was an unqualified loser in the 
events surrounding the 1912 settlement. Whole- 

1 "Increase in Prices of Anthracite Coal," op. cit., p. 10. 



THE CONFLICT 185 

sale prices were increased about 25 cents per ton 
and retail prices were increased from 25 to 50 cents 
per ton. In this case, as in many that have pre- 
ceded and that will follow it, the consumer is 
called upon to foot the bill. 

No sooner had the operators granted the increase 
in wages in the agreement of May 20, 1912, than 
they issued a circular prescribing increases in 
wholesale prices varying with the size of the coal. 
The prepared sizes (including chestnut and larger 
sizes) were increased an average of 31.23 cents 
per ton. The price of pea and the smaller steam 
sizes of coal was increased 16.14 cents per ton. 

The prepared sizes are consumed principally in 
domestic use, while the steam sizes are used by 
the manufacturers and owners of apartment 
houses, office buildings and other public structures. 
"The reason for placing the larger increase on the 
prepared sizes is said by the coal operators to be 
due to the inability to sell the steam sizes in com- 
petition with bituminous coal at any greater ad- 
vances than those which were made." 1 

The decision of the operators to increase the 
price of domestic sizes 31 cents at the same time 
that they increased the price of steam sizes 16 
cents deserves consideration. From the moment 
it was decided that the miners should have an 
increase in wages, the operators began casting 
about for a means of saddling the increase on the 
consumers of coal. Here, as in any other case of 
monopoly power, the rule on which prices are 

1 "Increase in Prices of Anthracite Coal," op. cit., p. 57. 



186 ANTHRACITE 

fixed is found in the famous railroad axiom, "all 
that the traffic will bear." The price is therefore 
fixed at the highest profitable point. Had the 
prices of anthracite steam sizes been raised more 
than 16 cents, the users of these sizes would have 
abandoned anthracite in favor of bituminous coal. 
The 16-cent increase represented the limit of the 
operators' monopoly power in that direction. 

The consumers of domestic sizes of anthracite 
coal presented a much easier mark than the users 
of steam sizes. The average householder prefers 
anthracite to bituminous coal because it makes 
less dust and dirt. Then, too, his rented furnace 
is built to burn anthracite and his experience is 
wholly with the use of anthracite. If he lives 
in a rented house, as more than two- thirds of the 
city and town dwellers do, and if he has acquired 
the habit of burning anthracite, the danger that 
he will abandon anthracite in favor of soft coal 
is remote. He is therefore a peculiarly fit subject 
for the exaction of a monopoly tribute. It is for 
this reason that the price of domestic sizes was 
increased by about twice as much as the price of 
steam sizes during the 1912 readjustment. 

The added cost of anthracite to the consumers 
which resulted from the 1912 price increase, is 
estimated by Mr. Manly at $10,832,843. Fully 
two-fifths of this amount covers the increase in 
chestnut coal, which is the most widely used of all 
the domestic sizes. 1 

The consumer suffered another heavy loss owing 

1 "Increase in Prices of Anthracite Coal," op. cit. t p. 55. 



THE CONFLICT 187 

to the passing of the discounts on prepared sizes 
during the spring and summer of 1912. For a 
number of years it has been customary to allow 
purchasers discounts of 50 cents per ton in April, 
40 cents per ton in May, 30 cents in June, 20 cents 
in July and 10 cents in August on prepared sizes. 
The object of this discount was to induce people 
to lay in their winter supply of coal in the spring 
and thus make work for the mines during the 
spring and summer months. The usual discount 
was not allowed during 1912. This suspension of 
discounts alone cost the consumer, according to 
the estimate made by the Bureau of Labor, about 
$2,500,000. 

In addition to the increase in the regular price 
of coal and to the suspension of the usual discounts, 
there were a considerable number of cases in which 
coal was sold at a premium over current whole- 
sale prices. In some cases this premium is re- 
ported to have gone as high as $2.00 per ton above 
the prevailing circular prices for the same grade 
and quality of coal. 

The possibility of selling anthracite at a pre- 
mium arose from the shortage due to the suspen- 
sion of operations in the early part of the year. 

There were a number of communities, notably 
in New England, where the retail dealers sold coal 
at scarcity prices. Although this practice was 
not widespread, it proved a serious additional 
burden where it was in vogue. 

Although it is impossible to estimate accurately 
the increased burden placed upon the consumer 



188 ANTHRACITE 

by the strike of 1912, it is the Bureau of Labor 
estimate that the increase in prices and the sus- 
pension of discounts alone forced the consumer to 
pay $13,450,000 more for his coal at 1912 prices 
than he had been compelled to pay at 1911 prices. 
This additional expenditure of $13,500,000 brought 
not one iota of benefit to the consumers. Indeed, 
it is accompanied in many cases by inconve- 
nience and dissatisfaction. The $13,500,000 of 
added cost bought the same number of tons of 
coal, containing the same number of heat units 
and prepared under the identical conditions. 

It. The Worker in 1912 

The consumer paid the entire bill incident to the 
1912 price increase. He was forced to add more 
than $13,000,000 to the cost of his coal. It seems 
evident that someone must have profited con- 
siderably by the transaction, and the general 
supposition is that that someone was the mine 
worker. 

Oddly enough, and public opinion notwithstand- 
ing, the mine worker seems to have gained com- 
paratively little by the 1912 agreement. Indeed, 
it undoubtedly represented a net loss for him, as 
compared with his position in 1903. The mine 
worker certainly cannot be accused of getting the 
lion's share of the price increase. Only a little 
more than one-third of it came his way. The 
Bureau of Labor reports that "a careful computa- 
tion based on the records of one of the largest 
companies shows that the increase in labor cost 



THE CONFLICT 189 

resulting from the agreement of 1912 and the 
readjustment of the wages of men not covered by 
the agreement, amounted to 9.75 cents per ton." 1 
At the same time, it will be remembered that 
coal prices increased on the average more than 25 
cents per ton. 

The mine worker did benefit immediately and 
directly by the strike. The advance in wages 
which the abolition of the sliding scale and the 
increase of 10 per cent over the wage of 1903 
provided, gave an increase of 5.6 per cent in wage 
rates. Estimating the amount of this increase 
upon the basis of the shipments from June to 
December, 1912, the miners gained about $4,000- 
000. Against this amount there must be placed 
the cost of the strike in money and in privation. 

The miners' demands for 1912 included a 20 
per cent increase in wages. They actually received 
a net increase of 5.6 per cent. What did this 
mean to them in comparison with the increased 
cost of living during the same period of years? 

The United States Department of Labor shows, 
in Bulletin 140, that the cost of food increased 
30.8 per cent between 1903 and 1912. During 
the same years the cost of clothing, shoes and the 
like increased approximately 20 per cent. While 
no extensive study has been made, it seems that 
the cost of rent in the anthracite fields has in- 
creased during the same time from 10 to 20 per 
cent. Figuring the food as two-fifths of the 
workingman's expenditure; and rent and clothing 

1 "Increase in Prices of Anthracite Coal," op. cit., p. 28. 



190 ANTHRACITE 

each as one-fifth, the apparent increase in the 
cost of living would be from 20 to 25 per cent. 
The increase in the wage rate between 1903 and 
1912 was therefore less than one-third of the 
increase in the cost of living. 

There is one additional factor which must be 
borne in mind, and that is that the anthracite 
miner had more opportunities to work in 1912 
than he had in 1903. The total days worked by 
the anthracite mines in 1912 were 231; and in 
1903, 206. This was an increase of 13 per cent 
in working time. Even counting this working 
time as a part of the benefits accruing to the miner 
during the interval between 1903 and 1912, the 
miner's increase in earnings did not make amends 
for higher prices. 

The conflict of 1912 left the mine workers still 
behind in their race with the cost of living, even 
though they gained $4,000,000 in additional wages. 
The gain of $4,000,000 was immediate. The loss 
through increased prices was permanent. 

5. The Operators in 1912 

The Bureau of Labor estimates that the oper- 
ators added $13,450,000 to their gross receipts 
as a result of the 1912 strike. They were enabled 
to do this because of the increase in wholesale 
prices and the suspension of discounts already 
noted. They had a further source of revenue in 
the sale of contract coal. 

Until the decision of the United States Supreme 
Court in December, 1912, the anthracite railroads 



THE CONFLICT 191 

purchased under contract the entire output of a 
large number of collieries operated by individuals 
and companies. Under these contracts, the price 
paid for prepared sizes is 65 per cent of the aver- 
age tidewater price. When the price of coal was 
increased in June, 1912, these contracts were not 
changed, and consequently the independent com- 
panies, selling on this basis, received only 65 
per cent of the 25-cent increase in the price of 
prepared sizes at tidewater, or 16.25 cents per ton, 
while the purchasing operators received 35 per 
cent of the increase, or 8.75 cents per ton. The 
independent operators paid their miners the same 
increase in wages as the larger coal companies 
and were probably subject to the same general 
operating conditions. The independent com- 
panies received an addition of 16J cents per ton 
in the price and paid an advance of 9 cents per 
ton in wages, leaving a margin of 7J cents to 
cover the other increased costs. The purchasing 
companies, on the other hand, had a margin of 
16 cents (25 cents minus 9 cents) on their own coal, 
plus 8.75 cents on each ton that they purchased 
and sold under the 65 per cent contracts. 1 Here, 
then, was an additional source of revenue for the 
larger operating and purchasing companies. 

There seems to be some basis for the operators' 
assertion that the cost of producing coal had 
increased. The agreement of 1912 added 9 cents 
burden to the labor cost of coal. Meanwhile, 
between 1903 and 1912, a number of factors 

1 "Increase in Prices of Anthracite Coal,'* op, cit. % p. 13. 



192 ANTHRACITE^ 

were responsible for adding to the cost of pro- 
duction. 

1. The veins worked were growing thin- 

ner, which necessitated the removal 
of a larger amount of rock and 
refuse. 

2. The increasing depth and area of 

mines added to the cost of trans- 
porting and handling of coal and of 
ventilating the mine. 

3. Many of the materials entering into 

mine construction had increased 
in price. 

There are] a number of decreasing production 
costs which must be set off against those which 
have increased. For example, most iron and steel 
was lower in 1911 than in 1903. During that 
time advances had been made in economy and 
efficiency of mining, cleaning, preparing and 
hauling coal. Mr. E. B. Thomas, president of 
the Lehigh Valley Coal Company, is quoted as 
saying, "The improvements already made, to- 
gether with those now in progress, tend not only 
to offset the increased expense in mining, incident 
to the greater depth of the working and the long 
underground haul, but also result in a greater 
percentage of prepared sizes of coal, the same 
having increased 9.38 per cent in the last five 
years." 1 

The status of production costs is thus summa- 

1 Annual Report of the Lehigh Valley Railroad Company, 1908, p. 48. 



THE CONFLICT 193 

rized in the Federal report: "The present report 
shows that the recent increases in prices have 
been more than sufficient to compensate fully 
those companies whose costs of production have 
increased more rapidly during recent years, and 
at the same time has very greatly increased the 
profits of those companies, of whom there are at 
least several whose costs of production either 
decreased or remained stationary during the same 
period. 

"This conclusion is based on the fact that when 
normal years are compared, none of the com- 
panies has suffered an increase in the cost of pro- 
duction equal to the increase in the selling price 
over and above the recent advance in wages.' ' 
As a result of the increased activity following the 
suspension of 1912, "the cost of production of one 
important company has been lower during the 
last six months of 1912 than during any year 
since 1903, in spite of the increase in wages 
required by the settlement of May 20, 1912. 
These comparatively low production costs during 
the latter half of 1912, combined with the in- 
creased prices, have created for this company 
during the six months net earnings greater than 
it has had in any entire year from 1902 to date." 1 

The total result for the operators was an im- 
mense increase in net receipts. "During the four 
months — June to September, 1912 — the seven 
companies which shipped 69.3 per cent of the 
anthracite coal during the same period received 

'"Increase in Prices of Anthracite Coal," op. cit., pp. 12-13. 
13 



194 ANTHRACITE 

at the advanced prices for their shipments $3,- 
572,588 more for their coal than they would have 
received at the prices prevailing in the same 
months in 1911." This is equivalent to an aver- 
age of 25.82 cents per ton advance over 1911 
prices. 

6. Some Lessons from the 1912 Experience 

The incidents surrounding the suspension of 
1912 verify the impressions gained from previous 
experiences with labor disturbances in the anthra- 
cite industry. 

The operators, controlling a great natural re- 
source, get what they can for their product. 
The price of those anthracite sizes that compete 
with bituminous coal was increased by only half 
as much as were the prices of the "prepared 
sizes" which are used in domestic consumption 
and do not compete with bituminous coal. The 
strike, as in previous cases, was used as a pretext 
for adding to prices an amount equal to three 
times the increased labor cost of the coal. This 
gave to the coal companies a handsome profit of 
$13,000,000 in 1912 and probably $10,000,000 in 
subsequent years. 

The mine workers, after having perfected their 
organization and waged a costly struggle, found 
themselves, at the end of the struggle, still unable 
to cope with the increase in the cost of living. 

The consumers fared worst of all. They paid 
a round increase of $13,000,000 for their coal in 
1912, over the 1911 prices; they got no more and 



THE CONFLICT 195 

no better coal in return for this immense price 
increase. 

The struggle of 1912 came and went. The 
operators profited handsomely, the miners fared 
indifferently, and the consumer foots the bill. 



CHAPTER 7 

AN OBJECT LESSON IN MONOPOLY 

1. The Anthracite Lesson 

The lesson taught by the anthracite situation 
is unmistakable. The advantages and dis- 
advantages of the private monopoly of natural 
resources are clearly portrayed. The conclusion 
cannot be avoided. 

The situation is stated in the body of facts 
presented in the last three chapters. The con- 
sumer, the worker, and the producer each face 
certain aspects of the issue. In its larger form, 
and summarized, the question resolves itself into 
a consideration of the price of coal to the con- 
sumer, the rate of wages to the worker and the 
rate of profits to the operator. The consumer is 
better off when his dollar buys a larger quantity 
of coal; the worker is potentially better off when 
he receives a higher rate of return for each hour 
or for each unit of labor; the producer is pre- 
sumably better off when he receives a larger per- 
centage of return on each dollar of investment. 

A summary of the relative position of con- 
sumer, worker and producer during the past fifteen 
years under the effective anthracite combination 
of 1898, appears below. The position of the con- 
sumer is stated in the relative number of tons 
of stove coal 1 that $10 will buy at New York 

1 The prices of egg, chestnut and pea advanced faster between 1900 and 
1912 than did the price of stove coal. 

(196) 



MONOPOLY 197 

wholesale prices; the position of the worker is 
stated in the rate of wages per hour or per unit 
of work; and the position of the producer is 
stated in terms of dividend rates. Tons of coal, 
wage rates and dividend rates are all reduced, in 
the table, to index numbers i 1 

Table XIV. — Index Numbers for Prices, Wage Rates, 
and Dividend Rates in the Anthracite Industry, 
1900 to 1914. The Figures for 1900 to 1904 Equal 100. 1 

CONSUMER. WORKER. OWNER. 

PURCHA SING WA GE RA TE OF 

POWER. RATES. DIVIDENDS. 

Number Wages Average 

of Tons Paid to Dividend 

for $io Miners Rate 

1900 113 95 85 

1901 104 95 98 

1902 100 95 75 

1903 92 108 114 

1904 92 108 159 

1905 92 108 242 

1906 92 108 268 

1907 92 108 281 

1908 92 108 278 

1909 92 108 461 

1910 92 108 281 

1911 92 108 395 

1912 88 114 287 

1913 88 114 284 

1914 ^ 114 272 

1 The method of finding the index number is as follows: The number of tons 
of coal that could be bought for $10 is ascertained for each year by dividing 
the price of one ton into $10. The average for the first five years (2.25 tons) is 
taken as a base. Arbitrarily it is stated as 100. The number of tons that the 
consumer received in 1900 for $10 was 2.54. If 2.54 is divided by 2.25 (the 
base) the quotient is 113. The results for each year are computed on a com- 
mon base. Since they have been reduced to a common denominator, they can 
be compared more readily than in their original form. Since the percentages or 
index numbers for prices, wages and dividends are all secured in the same way, 
they also may be compared. 



198 ANTHRACITE 

The relative position of the three parties at 
interest in the anthracite field during the fifteen 
years since the combination of 1898 became 
effective,, shows the owners to be the real gainers. 
The consumer, in 1900, could buy with $10 two 
and a half tons of stove coal at tidewater prices. 
By 1914 the increase in prices reduced the amount 
that he could buy with $10 to a little less than 
two tons. The wage-earner received an increase 
in wages in 1903 and in 1912. * These two advances 
have bettered his position by about one-fifth. 
Meanwhile the average dividends paid by the 
ten leading anthracite railroads advanced from 
2.8 per cent in 1900 to 9.1 per cent in 1914. As 
compared with a loss of 20 per cent to the con- 
sumers and a gain of 20 per cent to the workers, 
the owners show a gain of 220 per cent. 

The situation becomes even more acute if the 
figures are compared for the last five years, 
rather than for the year 1914, which, from a 
business standpoint, was unprosperous. During 
the past five years the purchasing power of the 
consumer has remained at about the same figure, 
90, as compared with 113 in 1900. The wages 
of the workers have increased slightly, making 
a figure, for the five-year period, of about 112, 
as compared with 95 in 1900. The average divi- 
dends of the anthracite carriers in the past five 
years have been 306, as compared with 85 in 
1900. The consumer's purchasing power shows 
a slight decrease, the worker's wage a slight 

1 There was also an increase of 10 per cent early in 1900. 



MONOPOLY 199 

increase and the owner's rate of profits an in- 
crease, for the five-year period, of 260 per cent. 

The profits as stated here are the apparent 
profits in the form of dividend rates on the com- 
mon stock. They make no allowance for increase 
in capitalization, nor do they take into consider- 
ation the fact that the anthracite business com- 
prises only a part of the business of these 
companies. Unlike the price to the consumer 
and the wage rate to the worker, the dividend 
rate is at best merely an indication of prosperity. 
It is neither an accurate nor final measure. Un- 
fortunately, it is the only measure available. 

Since the Anthracite Coal Combination got a 
foothold the workers have gained somewhat, the 
consumers have lost somewhat. The supreme 
advantage of this monopoly period has gone to 
the monopolists. 

2. The Losers and the Gainers from Monopoly 

Anthracite is only one of the many important 
natural resources that is being rapidly monopol- 
ized through the successful efforts of financial 
and industrial leaders to concentrate ownership. 
The lessons drawn from the anthracite monopoly 
may justly be regarded as significant and, in a 
large sense, typical of the results that will follow 
from the monopoly of other equally important 
natural resources. 

The consumer carries the burden of monopoly. 
Monopoly prices are fixed at a figure represent- 
ing "all that the traffic will bear." Increased 



200 ANTHRACITE 

«eosts of carrying on business, no matter what 
their origin, are passed on by the monopoly to 
the consumer in the form of increased prices. 
The power of substituting some other commodity 
for the one that is the subject of monopoly limits 
the price that the monopolist may charge. Sub- 
ject only to this power of substitution, the mon- 
opolist gets all that he can. 

The worker gains nothing from the presence 
of monopoly. As an employee of the monopoly, 
he is paid wage rates that are not materially 
different from the wage rates paid in competitive 
industry. The present method of fixing wage 
rates, by competition in the open labor market, 
makes it inevitable that this should be so. In- 
dustry pays for labor not what it can, but what 
it must. Even though a monopoly could afford 
to pay a much higher wage than a competitive 
industry, it need not, and therefore does not, do so. 

The monopolist is the real gainer from mon- 
opoly. The worker who serves the monopolist 
is paid the going rate of wages, and while the 
consumer foots the bill, the monopolist records 
his advantage in the form of increased dividends. 

The figures show conclusively that these things 
are true of anthracite. There is good reason to 
believe that they will hold no less true for other 
equally powerful natural resource monopolies. 

S. The Larger Menace of Monopoly 

The facts cited thus far have referred to the 
financial cost of monopoly. They are definite. 



MONOPOLY 201 

They are significant. They are the only mon- 
opoly facts that can be measured in accurate 
statistical terms. 

There are other aspects of monopoly which 
are more far reaching in their importance than 
any to which allusion has been made. Monopoly 
affects the economic, social and political organiza- 
tions of society in ways so fundamental as to 
attract the attention, during late years, of stu- 
dents, agitators, politicians, statesmen and every 
other group of people interested in progress. 

A recent writer makes this statement regard- 
ing the relation existing between the anthracite 
monopoly and the social order: "We have 
referred to the beginnings of concentration of 
wealth and ownership in the anthracite region 
as one of the causes of the break-up of the Union. 
The force of this factor increased to such an 
extent as not only to prevent the growth of the 
Union, but practically to control the industrial, 
social and political welfare of the region. ,,1 

Monopoly strikes at the basis of social organiza- 
tion. Monopoly affects society, root and branch. 
From every angle it appears as a menace to the 
democratic future of the community in which it 
exists. 

4. The Economic Effects of Monopoly 

The economic effects of monopoly are of far- 
reaching consequence. Four will be considered 
here. First, the natural resource monopolist 

1 "Conciliation and Arbitration," op. cit., pp. 214-15. 



202 ANTHRACITE 

controls the jobs or opportunities for work; 
second, he has a price-fixing power over the 
thing he produces; third, he has an automatic 
income-yielding machine; and fourth, his mon- 
opoly power enables him to appropriate values 
socially created. These four economic effects of 
natural resource monopoly give the monopolist 
a position of overwhelming advantage. 

First, and most important to the immediate 
interests of the great mass of mankind, the natural 
resource monopolist controls the opportunities 
for work. Under the conditions of modern in- 
dustry all men must work for a living. The ulti- 
mate source of livelihood is the store of wealth 
contained in nature's treasure-house. The indi- 
vidual who becomes owner of a part of this 
treasure-house may dictate to his fellow men the 
conditions of life to which they must subject 
themselves if they are to use the things that his 
part of the earth produces. 

The owners of the anthracite regions are in a 
position of peculiar strategic advantage because 
the field is so limited and because they have so 
absolute a control over it. There are 175,000 
men who work for the anthracite combination. 
There is dependent on these workers a population 
of perhaps 500,000. The mine owners, in theory 
at least, may allow or deny these men the oppor- 
tunity to make a living. 

Over great sections of the anthracite field 
there is no other considerable source of liveli- 
hood save that offered by the anthracite owners. 



MONOPOLY 203 

The workers must take the work that the mine 
owners give them or else they must go elsewhere. 
Under such circumstances, the companies wield 
the final power of saying to a man and to his 
family, "Thou shalt eat" or "Thou shalt not 
eat!" 

The point is well illustrated by a remark made 
by a witness before a Congressional Investigating 
Committee in 1887. A railroad superintendent, 
when asked why he was so sure the striking men 
would go to work at the company's terms, replied, 
* ' Their necessities/ ' ' ' Asked if he meant ' starved 
out/ he replied that the company did not propose 
to keep the men out till they starved, but re- 
minded the Committee that 'it (was) a necessity 
for everybody who works that they get work.' "* 

With this control of the chance to work goes a 
control of the conditions of work and life that 
is appalling in its completeness. This same 
Congressional Committee found that companies 
were paying by the "wagon," instead of the 
ton, and sending in wagons that held more than 
the standard wagon was supposed to hold; they 
found that men were docked heavily if the coal 
sent to the surface was not of a certain quality, 
that the companies were often slow in making 
payments of wages. The committee found, 
further, that where the company owned a large 
block of property, upon which a town was built, 
that the company owned the houses, the stores, 
the butcher shops; that the men were forced to 

1 "Conciliation and Arbitration," op. cit., pp. 237-38. 



204 ANTHRACITE 

subscribe to the income of the company doctor; 
in short, that the workers were not only working 
for the company, but were living for the com- 
pany as well. 

The miners were thus subjected by their em- 
ployers to an economic pressure from every side. 
During later years many of the worst abuses, 
involving company houses, company stores, the 
sale of powder at exorbitant figures by the com- 
pany, and the like, were abolished. The economic 
pressure on the job remains, and always will 
remain while one man owns the resources with 
which another man must work in order to live. 

Perhaps the most effective weapon in the hands 
of the operators, for controlling the men through 
their jobs, is surplus labor. Wave after wave of 
immigration has inundated the anthracite region. 1 
Speaking alien languages and accustomed to 
varying standards of living, the alien groups 
have pressed hard upon one another. Where 
there are two men competing for one job, the 
strife is apt to be keen enough if the men are 
friends and neighbors. When the two are of 
alien race, nation and language, the struggle 
becomes brutal. 

In the anthracite fields, as elsewhere, the 
employers have relied upon the presence of 
more men than there are jobs for much of their 
power. Not until the solidarity expressed in the 
organization of the United Mine Workers of 

1 "The Slav Invasion," F. J. Warne, 1904; "Anthracite Coal Communities," 
Peter Roberts, 1904. 



MONOPOLY 205 

America began to make itself felt, was this pcfwer 
seriously curtailed. 

The second economic effect of monopoly has 
been commented upon at sufficient length. The 
monopolists, through their monopoly power, fix 
prices and thus cut in upon the livelihood of 
all those who consume their product. 

The monopolist, in the third place, enjoys, in 
his ownership, an automatic income-yielding 
machine. The great majority of people work 
for the income on which they depend for a living. 
They exchange so many hours of effort for so 
many dollars of income. The owner of a desir- 
able natural resource is under no such obligation. 
His ownership puts at his disposal a wholly suf- 
ficient method of securing an income. 

Where there is land enough, or where there 
are resources enough for all, no monopoly price 
can be put on any single unit of the resource. 
So long as there are farms to be had for the 
asking, no owner can get a price for unimproved 
farm land. It is only after the supply is exhausted 
that resources possess monopoly power. 

In the case of anthracite, the resource is so 
limited that, almost as soon as its practicability 
was demonstrated, all the land known to contain 
anthracite commanded a price. This land was 
readily monopolized, and the entire community 
was clamoring for the product. 

Under these circumstances, the owner of a 
piece of anthracite land can secure, in return for 
his bare ownership, an income. Whether he has 



/ 



206 ANTHRACITE 

bought the land knowing it to contain anthra- 
cite or whether he had bought it for some other 
purpose, the fact that it does contain anthracite 
enables him to transfer his property to a mining 
company with the stipulation that for each ton 
mined within 10 years, 6 cents shall be paid the 
owner in royalty; for each ton mined within 
more than 10 and less than 21 years, 7 cents, 
and so on. By such means, the owner is put in 
possession of an income that will continue so 
long as the mining operations on his property 
continue. 

The owner is under no obligation. He does 
not work for his royalty with either his hands or 
his head. He owns a piece of property, and 
because of this ownership he receives a share of 
the proceeds from each ton of coal that is mined. 

The owner of a select portion of nature's store- 
house owns for a living. He secures his income 
in return for his property titles. 

There is a fourth economic result of the mon- 
opoly of natural resources. A title to natural 
resources often becomes more valuable as time 
goes on. Resources are made valuable by the 
presence of permanent populations, educated to 
their use. Manhattan Island sold for $26 because 
the Indians had no use for a harbor. If Man- 
hattan had belonged to a nation of traders in- 
stead of a nation of hunters, it would not have 
sold for £1,000,000 sterling. 

Other things being equal, the more permanent, 
progressive and intensive a civilization is, the 



MONOPOLY 207 

more will resources be worth. This is always 
true of the site values in city lots, for example; 
it is true of the power in waterfalls unless a new 
source of power is discovered; it is doubly true 
of a diminishing resource, like a fuel or a min- 
eral, where each ton mined is a ton less in the 
ground. 

Anthracite is a diminishing resource, limited 
in extent. As the supply decreases, the demand 
remaining constant, the price rises. As the popu- 
lation grows, increasing the demand, the price 
rises. As people build larger houses and intro- 
duce more extensive heating appliances, the 
demand increases and the price rises. 

The owner of anthracite land receives an income 
because he owns land from which coal is being 
mined. His income is augmented by the increase 
in the demand for anthracite and by the decrease 
in the supply. 

The private ownership of natural resources 
gives the owner an immense economic power. 
He has a large control over those who work for 
him; he places a monopoly price on his product; 
he enjoys an income in return for his ownership; 
and by virtue of his ownership, he receives, 
further, an increase in values due to the growth 
and progress of society. 

5. The Social Effects of Monopoly 

The social effects of monopoly arise largely 
out of its economic effects. Monopoly creates 
inequality; makes for class distinctions; pro- 



208 ANTHRACITE 

duces exploitation and makes impossible equality 
of opportunity. In all of these ways monopoly 
affects the organization and progress of society. 

Monopoly creates inequality. Herbert Spencer 
a half century ago pointed out, in Chapter 9 
of his "Social Statics," that if any person 
could own any piece of property and if there 
was no limit to the amount of property that 
might be owned by any one person, then 
one individual might, by gaining possession of all 
of the property, let us s&y, in Cuba, exact a 
tribute (rent) from every person in Cuba. This 
rent would be paid for the privilege of occupying 
land belonging to the man who had secured 
control of the island. 

Inequality of wealth is best created by per- 
mitting one man to own something that all of 
his fellows must have. The owners of the anthra- 
cite fields have an almost perfect example of a 
resource, limited in area, upon which millions 
depend for fuel. The inevitable consequence of 
such a situation is that the owners of the coal 
fields become rich, even though those who actually 
mine the coal are making less than a decent 
living. 

A reading of Gustav Myers' suggestive histo- 
ries of American and Canadian fortunes, in which 
he traces minutely the origins of private wealth, 
leaves in the mind one clear-cut impression — that 
the great fortunes were built for the most part 
upon the ownership of land, franchises, patents 
or other special privileges. The ownership of a 



MONOPOLY 209 

natural resource gives the owner a power over 
wealth that inevitably makes him richer than the 
people who put the products of his resource on 
the market. 

The second social effect of monopoly grows 
directly out of this first one. Monopoly is the 
largest single factor in creating the basis for a 
class distinction which at the present time takes 
the form of a distinction between owners and 
workers. Democracy is opposed to class dis- 
tinctions. Inevitably, then, it must oppose 
monopoly. 

The owner of a resource, as has been shown, 
receives an income because he is an owner. If 
all of the people owned resources and received 
income from their ownership, such a form of 
income would make no distinguishing mark 
between man and man. Resources are limited 
in extent, however, and the ownership of a 
resource by one person automatically excludes 
other persons from a like opportunity. 

Owners of desirable bits of the earth's surface, 
without the expenditure of any effort may demand 
and receive rent of their fellows for the use of 
their property. What must become of those 
fellow beings who use the gifts of nature that 
are owned by others? 

The workers who use the resources must put 
forth sufficient exertion to provide for the neces- 
sities of those dependent upon them, and in 
addition, they must produce an amount sufficient 
to pay rent to the resource owners. 



210 ANTHRACITE 

Here, then, are two kinds of people. One kind 
lives upon its property; the other kind lives on 
its labor. One derives its income from owner- 
ship; the other from work. One is the recipient 
of property income; the other of service income. 
This economic distinction forms the basis for two 
classes in society. 

The distinction between owners and workers 
is not new by any means. If history tells the 
truth, the same distinction existed in Egypt, 
Carthage, Greece, Rome. Sometimes the work- 
ers were freemen; more often they were slaves. 
During the middle ages the great landowners, 
backed by the Church under the Feudal system, 
exacted a return in labor or in kind from the 
serfs who were attached to the land. The situa- 
tion, historically, is too well known to demand 
further illustration. Always those who owned 
property were able to live upon the labor of 
another group which put the property to use. 

The self-same distinction will exist and does 
exist in any community which allows private 
individuals to secure possession of natural re- 
sources and to deny to their fellow men the right 
to their use. 

The existence of class distinctions leads inevit- 
ably to class antagonism. Those who are living 
upon their property at the expense of the com- 
munity are willing to sacrifice anything except 
the right to collect rents from the rest of the 
world. Meanwhile, they must use some device 
to cover up the fact that the great body of human 



MONOPOLY 211 

kind pays them a direct or an indirect tax because 
of their ownership. If no one owned undeveloped 
land, it would make impossible gains that are 
now derived from land held, unimproved, for an 
increase in value. The private ownership of re- 
sources is one of the most effective means of 
emphasizing the distinction between those who 
own and those who work. 

European aristocracy is built upon the dis- 
tinction between owners and workers. The 
aristocracy owned the land ; the peasantry worked 
it. The aristocracy lived, free from hand-soiling 
toil; the hands of the peasants were gnarled and 
rough. 

No member of the aristocracy could work at 
common labor and stay in his class. When 
Count Tolstoi went out into the fields and mowed 
with the peasants, all Europe treated the event 
as unique. No member of the aristocracy ever 
worked with his hands. The man who worked 
with his hands was no gentleman. Hand work 
branded the hand worker as of a lower social 
grade than was the person who never did hand 
work. 

The same feeling appears, even more strongly 
marked, in communities where slavery exists. 
The slaves do the hard work. The master class 
holds itself above labor. 

The owning class does not work. How then 
can it live? 

The answer to that question leads on to the 
next point in the argument. The ownership, by 



212 ANTHRACITE 

one group in the community, of the natural 
resources enables the owning group to live at 
the expense of the working group. 

The oft-reiterated saying, "He who will not 
work, neither shall he eat," is revised by the 
economic world, until it reads, "He who owns 
the land may eat and do no work." The own- 
ers of natural resources are able, because of this 
ownership, to live without work. 

The way in which the owners of resources may 
make others pay them rent is clear enough. Men 
and women must live upon the products of the 
earth. If all of the earth is preempted, those 
who do not own must make terms with those 
who do. That is true, but is it also true that the 
ownership of natural resources enables the owner 
to live without making any contribution to the 
community? Does not his very ownership con- 
stitute a contribution? 

Let us see. 

An English earl inherits an Irish estate. He 
has never visited the estate nor taken any inter- 
est in it. Each year, however, his steward col- 
lects and sends to him £1,000 in rentals. What 
contribution does the earl make to his Irish 
tenants? Clearly he makes no contribution. 
He did not make the land; he takes no interest 
in it; he never improves it. The land might 
be owned by anyone or no one; by an idiot child 
or a steel manufacturing corporation. In any 
case, the owner would collect the rents. 

The English earl has never worked in England. 



MONOPOLY 213 

He wears hats, coats and shoes that are paid 
for by the labor of his Irish tenants. The Eng- 
lish artisans exchange their labor with the labor 
of the Irish peasants, and the benefits are derived 
by the man who holds the land. 

The holder of the natural resource, because he 
is a natural resource owner, lives upon the work 
of those who must use his resources in order to 
gain a living for themselves. 

Exploitation is the term ordinarily used to 
characterize a condition of society under which 
one group of people lives upon the labor of an- 
other group without itself giving any return 
for the living it receives. Natural resource 
monopoly leads inevitably to exploitation. The 
owners hold in their possession the means whereby 
others must live. These others cannot choose, 
but must divide with the owners the product 
of their toil. 

The monopoly of natural resources in the 
United States has greatly accelerated exploita- 
tion. Huge fortunes have been built up on 
natural resource ownership. Thousands of fam- 
ilies, old people and young people alike, are 
engaged in the pursuit of "living on their in- 
come/' which means living on the power of 
ownership. 

"Living on one's income" has become a com- 
mon pastime in the United States. The aris- 
tocracy of Europe has been similarly engaged for 
centuries. Any group of people who can monopo- 
lize natural resources can share in the products 



214 ANTHRACITE 

of the labor of others, and thus "live on their 
income/ ' 

6. Monopoly Denies Opportunity 

Among all of the serious results of natural 
resource monopoly, perhaps the most serious is 
the fact that it denies opportunity. 

Opportunity is the corner-stone of democracy. 
Every child born into the world is to have a 
chance to develop his talents. This freedom of 
the individual to express himself gives all a chance 
to show their qualities. Thus the ablest will be 
called to leadership in science and art, industry 
and statesmanship. 

The early colonists had something of this ideal 
when they established private property in natural 
resources. The feudal system of entailed owner- 
ship had denied to most men the opportunity to 
show their qualities. Only the well-born, under 
that system, were given a chance. All this must 
be changed. All were born free and with equal 
rights to a chance in life. The free ownership of 
a bit of land would insure such a result. 

The scheme was tried, and the time came 
when all of the choice pieces of the earth were 
taken and held in fee simple "to him and to his 
heirs forever.' ' The ownership of the best re- 
sources was vested in great corporations and the 
twentieth century found all of the valuable 
resources in private hands. The child born today 
sees the doors to opportunity held shut by the very 
device that was relied upon to block them open. 



MONOPOLY 215 

A few own the resources. The rest, tinder the 
driving necessity to live, must go to these own- 
ers and ask for a chance to work. The great 
body of men must accept as masters those who 
own the means of livelihood. 

The anthracite fields are an excellent illustra- 
tion of the social effects of monopoly. The 
anthracite fields are not for sale. They are all 
held, and held tight, by great corporate inter- 
ests which do not propose to part with them. 
The owners of the stocks and bonds of these 
corporations do not even live in the hard coal 
regions. There are people today drawing income 
from anthracite stocks and bonds who have never 
seen an anthracite mine. The anthracite fields 
are owned by a group of absentee landlords who 
would not work in the mines, who would not 
dream of recognizing the miners socially or having 
any personal dealings with them, and yet who 
do not hesitate for a moment to live upon the 
proceeds of the labor of the anthracite mine 
workers. 

The children born to anthracite miners have 
this opportunity. They may secure a common 
school education, and then they must go to work 
in the mines and labor for those who own the 
resource. Yes, a few of them may save their 
money, buy stock in the mining companies and 
live upon the proceeds of the labor of other 
miners, but is that an answer to the prob- 
lem? Does it not emphasize instead of solving 
it? 



216 ANTHRACITE 

7. The Political Effects of Monopoly 

Beside the economic and social effects of 
monopoly, there are certain political effects, 
equally well defined and equally undesirable in 
their out-croppings. Theoretically the citizens 
of a democracy are the government. Practically, 
the monopoly of natural resources vests a sec- 
tion of governmental power in the natural resource 
monopolists. 

The most vital governmental power is the 
taxing power. The power to tax includes the 
power to destroy. The taxing authority holds 
life and death power over his subjects. 

What is the taxing power? 

Originally it was the right exercised by people 
in authority, to levy on their subjects. These 
levies included war duty, labor in the construc- 
tion of some public work, a percentage of the 
produce of the land, or, in later times, money. 
In the earlier stages of civilization a ruler would 
"farm out" the taxing power over a province. 
The governor of the province would be required 
to pay a certain levy. All of the taxes that he 
collected above this sum were his own. Many 
of the wealthy men of Rome made their money 
as governors of tribute territory. The idea under- 
lying this taxation was "get all you can." Con- 
sequently, the taxing authority took from the 
subjects everything except a bare living. 

The same concept of taxation existed in West- 
ern Europe for centuries. In France, under 
Louis XIV, the entire nation was drained to 



MONOPOLY 217 

build Versailles, equip it and beautify its sur- 
roundings. 

Earlier ages knew no such thing as a regular 
tax rate. The rule "get all you can" meant 
that the tax gatherer extorted the last farthing. 
Rousseau tells of a chance visit that he paid to 
a peasant hut. The man of the house, hospitable 
as his lot would permit, put on the table a piece 
of black bread and a bottle of sour wine. They 
talked for a long time over this meal, and in the 
course of the conversation the peasant assured 
himself that Rousseau was neither a tax gatherer 
nor a tax gatherer's spy. Thereupon he opened 
a trap-door in the floor and produced some white 
bread and good wine, with the explanation that, 
if the tax collector knew that such things existed 
in the house, his taxes would be increased. The 
peasant was taxed in proportion to his ability 
to pay, and taxed all that he had. 

This primitive form of taxation came to be 
regarded as tyranny. Why should the French 
peasant be reduced to thin onion soup and herbs, 
through the payment of his surplus to a king 
and a court that were living in extravagant luxury ? 
The peasant needed the surplus for his very neces- 
sities. The king needed it not at all; yet the 
king (or the prince or duke) got the surplus, 
because he owned the land. 

Many of the early American colonists fled 
from just such tyranny. They feared taxes 
because taxes meant want for the tenant and lux- 
ury for the proprietor. Hence, in this new land, 



218 ANTHRACITE 

following the example already set in the more 
advanced countries of Europe, taxes were levied 
only by the representatives of the people, and the 
proceeds of taxation were used only for the public 
good. Men still paid taxes, to be sure, but the 
proceeds of taxation went into roads, schools, 
public buildings and other public works, from 
which all of the people could derive benefit. 

Taxation was no longer tyranny, but a means 
of promoting public welfare. 

Then free public land disappeared and the 
monopoly power of those who held the resources 
grew apace. The power to tax appeared in a 
new form — the levying of "all that the traffic 
will bear." 

The wheels of time seemed to move backward. 
The struggles of centuries were set at naught. 
A newly created master class was levying on its 
subjects a tax, not fixed, not destined to minister 
to the public welfare, but "all that the traffic 
will bear." 

This taxing power of private monopoly, or spe- 
cial privilege, as it is sometimes called, takes on 
a new form. The old-time tax collector enforced 
his decrees against the producer. He took from 
the peasant who used the land a part of the wheat 
and the grapes which the land produced. The 
modern monopolist enforces his decrees against 
the consumer as well as against the producer. 

The worker must use his resources and pay to 
the owner a part of the product in rent or in 
surplus value. The monopolist adds to the legit- 



MONOPOLY 219 

imate costs of production an extra charge — a 
monopoly profit — equal to what the traffic will 
bear, and insists that the consumers pay a monop- 
oly price for the product. 

The owners of the anthracite coal fields are able 
to levy this monopoly tax on the people of the 
United States. They own an important resource; 
the public needs the products of this resource; 
the monopolists charge for their products the cost 
of production, a fair profit, plus a tax based on 
monopoly power. 

The owners of agricultural land, in feudal times, 
levied "all that the traffic will bear" on their 
tenants. The owners of natural resources in the 
United States today levy "all that the traffic will 
bear" on those who consume the products of 
their resources. Then, as now, this tax went, not 
to increase public welfare, but to increase private 
wealth. 

Politically, no phase of monopoly is so important 
as its taxing power. The powers of government 
are divided between the people (or their represen- 
tatives) and the owners of the natural resources. 
Although the facts are not available, there is 
every indication that the tax paid each year by 
the American people to the owners of special 
privilege is greater than the entire amount paid 
by them for the maintenance of the local, state 
and national governments. 

The second political effect of monopoly or special 
privilege carries the argument to the funda- 
mental character of the American government. 



220 ANTHRACITE 

Democracy is based on the assumption that all 
men have equal rights. Special privilege is based 
on the assumption that some men have exclusive 
rights. The two ideas are diametrically opposed. 

When special privilege comes in at the door, 
democracy flies out at the window, i The monopoly 
of the anthracite coal fields by a few, automatically 
excludes all others from ownership at the same time 
that it puts in the hands of the few the power to 
tax the many. 

Special privilege annihilates democracy. The 
present system of privately owned natural re- 
sources is in its very essence a form of special 
privilege. 

Privilege and democracy are opposed, each to 
the other. If privilege wins, democracy is lost. 
If democracy wins, privilege is destroyed. The 
contest between the two was never more bitter 
than it is today. 

The American government was founded on a 
basis of democracy. The growing monopoly 
power of resource ownership undermined this 
democracy, until in the seventies and eighties, 
with the rise of great aggregations of capital 
known as "trusts," the very existence of democ- 
racy was threatened. The last forty years have 
witnessed a growing public consciousness of the 
danger and a myriad of efforts to curb special 
privilege. Anti-trust and railroad legislation 
leads the list of the legislative remedies for monop- 
oly control that have been adopted by the Amer- 
ican people. 



MONOPOLY 221 

8. Anthracite and the Government 

The anthracite fields have presented a pecu- 
liarly significant phase of the conflict between 
privilege and democracy, because there the 
natural resource monopoly and the railroads 
have, for many years, worked in the very closest 
harmony, thus combining two of the most power- 
ful forms of privilege. 

Suffern, in his analysis of the relations between 
the anthracite owners and the people, writes: 
"Large combinations of capital not only assumed 
all the arrogance of individual ownership, but, 
because they were conducting large enterprises 
which could not be carried on without immense 
capital, they believed themselves entitled to 
greater consideration than the small owners. The 
suspicion with which the monopolistic tendencies 
of large corporations were regarded led their 
representatives before the legislature to empha- 
size the favors which large organizations conferred 
upon the commonwealth and to overawe the simple 
legislative mind with their mighty projects." 1 . . . 
"Since the state laws were ineffective, the con- 
certed action of the union was necessary to bring 
about the abolition of the abuses." 2 

Continuing, Suffern shows the ways in which the 
owners of the anthracite coal properties shaped 
the government to serve their own purposes. The 
Pennsylvania State Constitution of 1874, "pro- 



1 "Conciliation and Arbitration," op. cit. % p. 215. 
« Ibid., p. 244. 



222 ANTHRACITE 

hibited railroads from engaging in mining and 
manufacturing." The party in power promptly 
passed a series of acts which permitted railroads 
to hold any coal lands acquired previous to 1874 
and by an appeal to the Court of Common Pleas 
permitted the validation of charters rendered 
defective by the new constitution. As a result of 
these laws, the railroad interests continued the 
mining of coal as heretofore. 

Judicial interpretation was effective in giving 
still wider limits to corporate activity in the coal 
fields. 

An investigation by the Interstate Commerce 
Commission in 1907 showed that "the ownership 
of coal properties and stock in coal companies by 
officers of the Pennsylvania Railroad resulted in 
grave abuses in discrimination and distribution 
of cars." 1 The legislature passed a law forbidding 
officers or employees of railroads to have an 
interest in coal properties along the line of their 
own railroad. The same legislature created a 
railroad commission and passed a law forbidding 
common carriers to "engage in any other business 
than that of common carriers, or hold or acquire 
lands, freehold or leasehold directly or indirectly, 
except such as shall be necessary for carrying on 
its business." 2 "Evidently these simple pro- 
visions had 'disquieted' somebody, for in 1909 
an act was passed 'to quiet the title of real estate 
and to enable citizens of the United States, and 

1 "Conciliation and Arbitration," op. cit., p. 218. 

2 Ibid., p. 219. 



MONOPOLY 223 

corporations chartered under the laws of this 
Commonwealth, and authorized to hold real 
estate therein, to hold and convey title to real 
estate, which had been formerly held by corpora- 
tions not authorized by law to hold real estate 

in Pennsylvania Somebody must have 

required considerable 'quieting,' for this identical 
act, which had been approved by Governor 
Stuart, April 23, 1909, was again enacted and 
approved by Governor Tener, March 7, 1911, and 
re-enacted and approved by the same governor, 
June 15, 1911. Evidently it was thought a 
necessary precaution to pass the act every time 
transfers of property were made. 

"We have given this brief resume of the legal 
background simply to demonstrate the practically 
unlimited sway held by capital in the anthracite 
region and how little consideration of the law was 
necessary before consummating the deals which 
took place between 1874 and 1911. 

"We have referred to the extent of the owner- 
ship of lands in 1872 and 1873. The Reading 
Railroad made good use of the time, so that when 
the constitution went into effect in 1874 it was in 
possession of 100,000 acres. As we have seen, 
from a legal standpoint there was not much to 
hinder further purchases, and by 1887 the Read- 
ing owned 165,189 acres of coal and agricultural 
lands which had a bonded indebtedness of $160,- 
000,000. ... By 1896 it was estimated that 
96.29 per cent of the coal lands was controlled 
directly or indirectly by the railroads, and 90 per 



224 ANTHRACITE 

cent was controlled by five out of the eleven roads 
reaching the anthracite fields. ... As we have 
seen, laws were passed in 1897 and 1903 to legalize 
transfers that had been made since 1896." 1 

The extensive purchase of coal lands and the 
extensive mining operations carried on by rail- 
road interests are but examples of the way in which 
the owners of the anthracite fields showed them- 
selves superior to the law. 

The monopoly of natural resources places in 
the hands of the monopolists such power that 
they are able to levy a tax on all consumers of 
their product. So great is this special privilege, 
given to the few and withheld! from the many, 
that in past years the natural resource owners 
have been able to direct some of the affairs of 
government. 

9. The Enemy Within the Gates 

However attractive the plan for the private 
ownership of natural resources may have looked 
to the early settlers of America; whatever escape 
it may have offered from the grim tyranny of 
European landlordism, the project apparently has 
failed. It was designed to promote ambition, 
initiative and thrift; to create opportunity and 
to increase the possibilities for life, liberty and 
the pursuit of happiness. In practice, it has led 
to a new form of monopoly — the monopoly of 
industrial opportunity. 

The private ownership of natural resources has 

1 "Conciliation and Arbitration," op. ciL, pp. 119-21. 



MONOPOLY 225 

gone farther. By giving to individuals the ex- 
clusive right over the choice bits of the earth's 
surface, it has placed in the hands of these indi- 
viduals an immense power — economic, social and 
political. Economically, it gives the monopolist 
the power over the opportunities for the employ- 
ment of his fellows, enables him to fix prices, gives 
him an income for which he need do no work and 
permits him to take possession of social values. 
Socially, natural resource monopoly leads to 
inequality, makes for classes and for class dis- 
tinctions, makes possible exploitation and makes 
impossible equality of opportunity. Politically, 
natural resource monopoly gives the monopolist 
the power to tax the community and enables him 
to set up an authority which frequently dominates 
and supplants the authority of political govern- 
ment. The private ownership of natural resources 
has centered in the hands of the resource owners 
an immense authority over the destinies of 
mankind. 

The early arguments in favor of natural resource 
ownership by individuals were based on the 
assumption that the individuals who owned 
would be energized and stimulated. The private 
ownership would therefore open a larger field of 
opportunity for mankind. 

The chief resources are today owned by corpora- 
tions which have neither energy, thrift, ambition 
nor any other human virtues. Instead, they are 
legal entities, with perpetual life, limited liability 
and an immense range of authority. The owner- 
is 



226 ANTHRACITE 

ship of most of the important resources has passed 
from the individual to the corporation, and with 
that transfer there has gone practically every one 
of the original arguments in favor of the private 
ownership of resources. The founders of Amer- 
ican democracy presupposed an individual owner- 
ship. The revolution in the form of industrial 
control has made the ownership largely corporate. 

Although the chief reasons in favor of the pri- 
vate ownership of natural resources have been 
swept out of existence by the inauguration of 
corporate ownership, private ownership remains — 
a special privilege under the control of the few, 
and carrying with it a monopoly power of the 
most sweeping character. Exercising its authority 
as a means of augmenting profits, strangely blind 
to the public weal, this monopoly of the means of 
life threatens to wreck this civilization as it has 
wrecked its predecessors. 

Natural resource monopoly entered our civili- 
zation as a friend and benefactor. Time and 
experience have shown that a wolf was hiding 
under the sheep's clothing. 

The lesson of natural resource monopoly — as it 
appears in history, as it exists in the anthracite 
fields, as it may be found in other American 
resources — is unmistakable. The benefits go to 
the privileged few, while the great majority of 
men pay the bill. 



CHAPTER 8 

THE FUTURE OF ANTHRACITE 

1. The Conflicting Anthracite Interests 

The figures that have been cited show con- 
clusively enough that there is, in the anthracite 
field, a line-up of conflicting interests. On the 
one side are the operators; on the other side are 
the workers and the consumers. The operators 
aim at large profits; the workers demand high 
wages; the consumers seek low prices. High 
wages and low prices threaten profits, hence the 
advocates of high wages and low prices are neces- 
sarily brought into conflict with those who aim 
at large profits. 

There is nothing uncommon about such a situa- 
tion. Everywhere one meets with conflicting 
interests ; everywhere there are gainers and losers. 
Opposed to each group in the community is some 
other group. The organization of society arises 
out of this diversity of interests. The important 
point is not that some gain and others lose, but 
who gains and who loses. 

The answer which American philosophy makes 
to such a conflict is unmistakably definite. The 
net gain must be the gain made by the majority. 
The principles laid down as the foundation of 
American political and social life allow of no other 
alternative. 

(227) 



228 ANTHRACITE 

The American governmental idea was born at 
the end of a political and social system that had 
as its object the gain of the favored few. A special 
class (the aristocracy of Europe), selected auto- 
matically by the accident of birth, through their 
control of the natural resources and of the offices 
of trust, enjoyed the first fruits of the land. 
Meanwhile the great mass of mankind worked 
on the land owned by the few, did their bidding 
in peace and in war, and received for these services 
the barest subsistence. The government was 
managed in the interests of a small number of 
hereditarily privileged persons. They enjoyed its 
benefits while the remainder of the human race 
carried its burdens. 

America was the embodiment of a protest 
against a social system maintained in the interests 
of a special class. The American government 
was to be a government by the people, in their 
o™ r n behalf. 

The laws of life dictate that in every conflict 
some must lose and some gain. Feudalism 
boasted a few gainers and a great many losers. 
The early colonists, as well as the founders of the 
State and Federal governments, sought a social 
system under which there should be many gainers 
and only a few losers. 

Was this too much to hope? Was it unreason- 
able to expect that a system of society could be 
devised under which the majority and not the 
minority were to be the net gainers in life? If 
such a proposition is hopeless, the whole basic 



THE FUTURE 229 

assumption of democracy is false. So long as that 
belief in the importance of majority welfare per- 
sists — so long as the democratic ideal holds sway — 
any question of public welfare must be decided 
with the welfare of the majority directly in view. 

The problem of natural resource control is one 
of those large social questions that must be tested 
in terms of majority welfare. Those who control 
the resources of the country hold under their sway 
the nation's "tree of life." Let one part of the 
people secure full control of these resources and 
their "yea" or "nay" is the last word that can 
be said. 

The problem of natural resources differs not a 
whit from any other question of social welfare 
save that it is more vital than most questions. 
The same rule of social procedure that held good 
in 1789 holds good in 1916. Those things that can 
be privately managed, with a maximum of advan- 
tage to the community, must be left under private 
control. Those things, on the other hand, that 
under private control might become a menace to 
community welfare must be publicly managed in 
the interests of all. The Constitutional Con- 
vention proceeded on this assumption, leaving all 
mercantile and manufacturing business to private 
initiative, while the control over waterways, post 
roads, the issue of money, and other like activities 
that experience had shown to be necessary to 
public welfare, was vested in the government. 

During the past century and a half the Ameri- 
can people have had a very definite experience 



230 ANTHRACITE 

with the private ownership of natural resources. 
This experience is typified by the situation in the 
anthracite fields. What action shall they take in 
this and other cases of like import ? 

2. The Coal Owners Would Stand Pat 

One group of interests in the anthracite fields 
is entirely willing to let things remain as they are. 
The coal owners are satisfied. They can well 
afford to be contented with the situation, since 
the net benefits from the present system of land 
control accrue almost wholly to them. 

As things stand at present, the owners of the 
anthracite properties have the following assets: 

1. A valuable natural resource which is 

readily convertible into a highly 
marketable product. 

2. A large and an assured income that is 

based on the continued use of this 
resource. 

3. A property that, up to a certain point, 

will increase in value as years go by, 
and that, owing to the accepted 
methods of bookkeeping, will leave, 
after its exhaustion, a depreciation 
or amortization fund sufficient to 
return to the owners an amount 
equal to the high-tide value of the 
property. 

4. So long as the present system of land 

ownership continues, a source of 



THE FUTURE 231 

increasing monopoly power, based 
on a steadily growing demand 
and a decreasing supply of an- 
thracite. 

If there can be any assurance in investment, 
this anthracite investment is sure. The owners 
know this. They, better than anyone else, 
appreciate the supreme importance, to them, of 
their present position. Therefore they stand for 
the continuance of a system that produces huge 
profits for the owners and subsistence wages for a 
great body of the workers, while it lays the full 
burden upon the consumer in the form of increased 
prices. 

3. The Future for the Workers 

The owners are satisfied, but they are, numer- 
ically, only one small factor in the problem. 
There are 175,000 anthracite workers. What is 
their position? 

The workers are not satisfied with things as 
they are. On the contrary, they have, during 
recent years, expressed themselves continually 
and forcefully in long-continued, bitter labor wars. 
The workers want a change in the conditions pre- 
vailing in the anthracite fields, and they want it 
so badly that they have shown their willingness, 
during one suspension after another, to suffer 
privation and to see their families suffer privation 
in order to bring about the changes in which they 
believe. 



232 ANTHRACITE 

The anthracite workers may demand any one 
of five important changes in the coal fields : 

1. They may demand a minimum wage 

based on the cost of decent, health- 
ful living. 

2. They may demand, over and above 

this "living wage," a return for the 
extra hazards of the work which 
they are called upon to do. 

3. They may insist that these wages shall 

increase in proportion to the in- 
creasing cost of living. 

4. They may demand a share in the 

phenomenal prosperity of the an- 
thracite business. 

5. They may demand the "full product" 

of their labor. 

The first three demands may be realized through 
the operations of a powerful trade union. The 
miners have a number of excellent examples before 
them. The railway brotherhoods, after years of 
unceasing activity, have at last reached a point 
where they command public confidence and exer- 
cise an authority so strong that they have secured 
a wage that represents decency, risk and, in the 
last year or two, the increase in the cost of living. 
Indeed, these unions have grown so powerful that 
in the last request for an increase of wages on the 
western lines, the men were willing to argue that 
they were entitled to some share in the prosperity 
of the railroads. The building trades, the printers 



THE FUTURE 233 

and a few other trade groups have been able to 
secure decency wages through their trades union. 
The union is therefore an agency that the mine 
workers may rely upon to give them wage in- 
creases up to a certain point. 

The unions have generally failed to get a share 
in the prosperity of the industries for which they 
worked, unless full time work can be regarded as 
a share in prosperity. This failure has been due 
mainly to the facility with which the employers 
have been able to shift the burden of increased 
wages to the consumer. 

The manner in which the increase in wages to 
the anthracite workers has been used as an excuse 
for adding even greater burdens to the load carried 
by the anthracite consumer, is found, in dupli- 
cate, wherever the employers have a sufficiently 
great monopoly power. The result is that the 
apparent gains of a few workers have been more 
than neutralized by the general increase in the 
prices paid by all workers. 

Unions have bettered working conditions, raised 
wages, decreased hours and given to the workers 
a feeling of solidarity. From the very nature of 
the case, they cannot be an important factor in 
securing a fairer distribution of income, so long 
as the employers possess a monopoly power 
sufficient to enable them to use a wage increase 
as an excuse for adding that and more to the price 
of the product. 

The demand for the "full product' ' of labor, 
voiced so persistently of late years, presupposes 



234 ANTHRACITE 

a complete overturn of the present economic organ- 
ization of society. So long as the owner of a 
piece of anthracite land, simply because he is the 
owner, is permitted to take a share of the product 
of the mines, there can never be a "full product" 
to the worker. So long as the owner of the mine 
machinery, simply because he is the owner, is 
able to take a share of the product of the mines, 
there can never be any "full product" to the 
workers. The term "full product" of labor pre- 
supposes an economic system under which income 
from industry goes only to those who render some 
active service to the community. Such a situa- 
tion cannot be realized until there is a very com- 
plete social ownership of all of the natural re- 
sources and of the social tools of production. 
This would mean, in the anthracite fields, that 
the community would own and operate the anthra- 
cite mines, that it would plan to pay wages equal 
to what each man produced, and that all forms of 
social value, due to the value of the coal in the 
ground, to the value of rights of way and the like, 
would go into the common treasury, to be used 
for the building of roads and high schools for the 
payment of accident and old age insurance, for 
the extension of public work, and for the doing of 
other things that are necessary to public welfare. 

Any such program obviously requires the com- 
plete readjustment of some of the most funda- 
mental economic relations. At the same time, 
many of the workers are convinced that nothing 
except a fundamental readjustment will success- 



THEFUTURE 235 

fully bridge over the chasm of economic malad- 
justments that appear to lie on all sides of the 
present order. 

The facts stated in the chapter on the wages of 
the anthracite workers made it clear that there 
were reasons why the workers might well be dis- 
satisfied with the present economic order in the 
anthracite regions. The least the miners can hope 
for is a powerful, aggressive union that shall raise 
their wages to a level of living decency and make 
them reflect the risks of the trade and the increas- 
ing cost of living. The most that the miners can 
hope for is a complete readjustment of the eco- 
nomic situation in the anthracite fields that will 
make the whole people the owners of the field and 
the employers of the miners, and that will give 
to the miners, as workers, consumers and members 
of society, the full product of their labor 

4- The Consumers and the Future 

The consumers are the great majority of people 
at interest in the anthracite problem. Under the 
present system of administration of the coal 
mines they pay the full cost of every change in 
the expense of production, in the wages of the 
workers or in any other matter affecting the 
economic aspect of the anthracite situation. It 
is as if the operators should say to the general 
public, "We will be glad to make any improve- 
ments that you suggest, to alter our wage scale, 
increase the safety of our mines, reduce the amount 
of child labor, modify the form of our combina- 
tion and take such other steps as you may advise, 



236 ANTHRACITE 

but you will readily understand that we cannot 
hope to do these things without incurring addi- 
tional expense. Since our profits are only barely 
sufficient now, we see nothing for it but to add the 
cost of these admittedly necessary improvements 
to the price which you pay for your coal." 

The consumer is thus brought face to face with 
the monopoly problem wilich was discussed in the 
first chapter. The operators have proved them- 
selves sufficiently powerful to add to the price of 
the coal the increases that have come from changes 
and improvements, and in addition a tidy sum in 
return for their monopoly advantage. The coal 
owners charge "all that the traffic will bear." 
What shall the consumers do to secure just or 
"cost" prices? 

It is obvious that the consumers are powerless 
as individuals. Their one hope lies in concerted 
action. The monopolists of any needed resource, 
under the present system of property ownership, 
are able to force their will as against any one per- 
son, or as against any group of persons, unless 
they are powerfully equipped to contend in the 
economic arena. 

The machinery of government is the logical 
channel through which the consumers may express 
themselves. They are the body of the people, 
and the government of a democracy is a govern- 
ment of the people. The consumers are organized 
in the most powerful organization in the com- 
munity — the government. They would naturally 
employ this organization in their efforts to secure 



THE FUTURE 237 

justice in their dealings with the anthracite 
interests. 

There are really only two ways in which the 
consumer may express himself through his gov- 
ernment. First, there is taxation; second, there 
is state ownership. Some people still insist on the 
possibilities of government regulation, but a quar- 
ter century of endeavor, during which State and 
Federal governments have vied with one another 
in their efforts to " regulate' ' and during which 
together with many other natural resource monop- 
olists, the anthracite coal owners have succeeded 
in perfecting a monopoly organization that gives 
them virtual control of the price of their product, 
has convinced many of the most ardent advocates 
of regulation that the government cannot succeed, 
in the face of highly organized private monopoly, 
in working out a successful scheme of regulation. 

The reason for the failure of regulation lies in 
the fact, already noted in the discussion of the 
political effects of monopoly, that the industries 
that are subject to regulation often prove to be 
so much stronger than the government that they 
can make and modify laws and direct public affairs 
in their own interest. Their control of the 
resources gives them a source from which to draw 
the huge surplus funds that are needed to run an 
organization in successful opposition to the estab- 
lished government. The best proof of the power 
of these great industrial combinations is their 
existence after a quarter century of endeavor to 
overthrow them. 



238 ANTHRACITE 

The subject may be attacked from a different 
angle. The community may exercise its power 
through taxation. The value of the coal in the 
ground, and the values that are added to the coal 
as population increases and demand grows, are 
social values. That is, they are created by the 
entire community and are not in any sense the 
result of the activity of any single individual. 

A tax might be imposed by the community on 
the anthracite industry that would absorb the full 
value of the land — the full social value — irrespect- 
ive of the improvements that have been made 
upon it. 

The taxation method is simple. It is direct. 
It makes use of governmental machinery already 
in existence. It introduces no new principle and 
therefore is not subject to the objection of unwork- 
ableness. All of the arguments in favor of the 
possibilities of the plan are adequate, barring this 
one objection. It is proposed to put into opera- 
tion a system that will prove more drastic than 
any form of regulation ever pretended to be, 
against the opposition of the same group of in- 
terests that have been successful in thwarting 
previous attempts at effective regulation. These 
interests have refused in the past to permit regu- 
lation. What reason is there for supposing that 
they will now accept the operation of a system of 
taxation that will do practically what the regula- 
tive measures passed heretofore have failed to 
accomplish ? 

Wherever the mine laws, health laws, child labor 



THEFUTURE 239 

laws and new tax laws have added to the cost of 
producing coal, the operators have calmly put 
these additional costs in the column under ' ' Fixed 
Charges" and asked the consumer to foot the bill. 
What reason has the consumer to suppose that the 
same thing will not happen in the case of the tax 
on social values? 

The logic of the situation seems to force the 
conclusion that as long .as the owners of the anthra- 
cite fields retain their present monopoly power, 
the consumers are helpless before them. There 
is, then, only one thing for the consumers to do, 
and that is to eliminate the monopoly power of 
the anthracite interests, which lies in their owner- 
ship of a natural resource. 

The consumers have their government founded 
on the idea of political democracy. Side by side 
with this political democracy, dominating its 
activities in some directions, threatening its very 
existence in others, is the monopoly organiza- 
tion of coal interests. This organization is in 
many respects stronger than the government 
itself. Through its monopoly power it exercises 
such governmental functions as that of taxation. 
The organization secures laws and interprets 
them. It is a form of government existing at the 
same time and place as the political government 
which the citizens of the United States for a long 
time believed to be the only government in the 
land. 

A house divided against itself cannot stand. 
Two equally powerful governments cannot exist 



240 ANTHRACITE 

at the same time in the same jurisdiction. One or 
the other is bound to assume a position of domi- 
nance. 

The consumers of the United States must 
choose between the two governments in the 
anthracite industry. If they favor monopoly 
profits, they should decide in favor of the anthra- 
cite interests. If, on the other hand, they believe 
that the democratic principles that underly the 
American system of political government are still 
valid, and still applicable to the affairs of the 
people, then the people themselves must under- 
take the management of this and of every other 
enterprise whose existence threatens the continu- 
ance of a government by the people. 

The workers in the anthracite regions are in a 
position where they can endure the present eco- 
nomic system if they are able to maintain a suffi- 
ciently powerful union. To the consumer, the 
continuance of the present economic system in 
the anthracite fields means not only the financial 
burden of monopoly profits, but a far more oner- 
ous burden in the form of an attack on the very 
foundations of the established political govern- 
ment, which the consumers regard, and rightly so, 
as their one source of protection and power. 

The interests of the consumer clearly demand 
that the community, acting through the state or 
the national government, shall take possession of 
the anthracite coal fields, operate them in the 
interests of the community and sell the people coal 
at cost. Many recent precedents for this action 



THEFUTURE 241 

exist. The government has developed irrigation 
projects and sold them to the people at cost; in 
its largest single venture it is developing trans- 
portation in the Panama Canal and selling it to 
the people at cost. The time seems to have come 
when the public interest demands that the govern- 
ment shall take over the anthracite coal fields and 
sell anthracite to the American people at cost. 

5. Winners and Losers 

A continuance of the present system of owner- 
ship in the anthracite fields will benefit the oper- 
ators alone. They are the ones primarily inter- 
ested in the maintenance of things as they are. 
The workers and the consumers, making up the 
vast majority of those who are interested in the 
anthracite problem, will benefit only through 
some change in the present system. The change 
which seems most likely to benefit both workers 
and consumers is an economic reorganization that 
will make the community the owner and director 
of the anthracite field and of its administration. 



END 



16 



APPENDIX 

SHIPMENTS OF ANTHRACITE BY SIZES, LONG 
TONS, 1890 TO 1913 





Sizes Above Pea 


Sizes — Pea and Smaller 


Total 




Quantity 


Per Cent 


Quantity 


Per Cent 


Shipment 


1890 


28,154,678 


76.9 


8,460,781 


23.1 


36,615,459 


1891 


30,604,566 


75.7 


9,843,770 


24.3 


40,448,336 


1892 


31,868,278 


76.0 


10,025,042 


24.0 


41,893,320 


1893 


32,294,233 


74.9 


10,795,304 


25.1 


43,089,537 


1894 


30,482,203 


73.7 


10,908,997 


26.3 


41,391,200 


1895 


32,469,367 


69.9 


14,042,110 


30.1 


46,511,477 


1896 


30,354,797 


70.3 


12,822,688 


29.7 


43,177,485 


1897 


28,510,370 


68.5 


13,127,494 


31.5 


41,637,864 


1898 


28,198,532 


67.3 


13,701,219 


32.7 


41,899,751 


1899 


31,506,700 


66.1 


16,158,504 


33.9 


47,665,204 


1900 


29,162,459 


64.7 


15,945,025 


35.3 


45,107,484 


1901 


34,412,974 


64.2 


19,155,627 


35.8 


53,568,601 


1902 


19,025,632 


61.0 


12,175,258 


39.0 


31,200,890 


1903 


37,738,510 


63.6 


21,624,321 


36.4 


59,362,831 


1904 


35,636,661 


62.0 


21,855,861 


38.0 


57,492,522 


1905 


37,425,217 


60.9 


23,984,984 


39.1 


61,410,201 


1906 


32,894,124 


59.1 


22,804,471 


40.9 


55,698,595 


1907 


39,332,855 


58.6 


27,776,538 


41.4 


67,109,393 


1908 


38,319,325 


59.3 


26,345,689 


40.7 


64,665,014 


1909 


36,437,762 


58.1* 


26,250,597 


41.9* 


62,688,359 


1910 


38,415,323 


58.5* 


27,297,438 


41.5* 


65,712,761 


1911 


41,728,071 


59.2* 


28,696,126 


40.8* 


70,424,197 


1912 


39,538,583 


60.6* 


25,662,670 


39.4* 


65,201,253 


1913* 


43,934,919 


61.6* 


27,360,797 


38.4* 


71,295,716 


■ — Mineral Resources of the United States, 


1913, Part II, p. 889. 



* Exclusive of coal recovered by river dredges. 



(243) 



244 APPENDIX 

EMPLOYEES, WORKING TIME AND TONNAGE 
1890 TO 1913 





Men 
Employed 


Days 
Worked 


A verage 
Tonnage Per 
Man Per Day 


A verage 

Tonnage Per 

Man Per Year 


1890 


126,000 


200 


1.85 


369 


1891 


126,350 


203 


1.98 


401 


1892 


129,050 


198 


2.06 


407 


1893 


132,944 


197 


2.06 


406 


1894 


131,603 


190 


2.08 


395 


1895 


142,917 


196 


2.07 


406 


1896 


148,991 


174 


2.10 


365 


1897 


149,884 


150 


2.34 


351 


1898 


145,504 


152 


2.41 


367 


1899 


139,608 


173 


2.50 


433 


1900 


144,206 


166 


2.40 


398 


1901 


145,309 


196 


2.37 


464 


1902 


148,141 


116 


2.40 


279 


1903 


150,483 


206 


2.41 


496 


1904 


155,861 


200 


2.35 


469 


1905 


165,406 


215 


2.18 


470 


1906 


162,355 


195 


2.25 


439 


1907 


167,234 


220 


2.33 


512 


1908 


174,174 


200 


2.39 


478 


1909 




[205] 


.... 




1910 


169,497 


229 


2.17 


498 


1911 


172,585 


246 


2.13 


524 


1912 


174,030 


231 


2.10 


485 


1913 


175,745 


257 


2.02 


520 



-Mineral Resources of the United States, 1913, Part II, p. 753. 



INDEX 



Accidents, anthracite, 104 

Accidents, anthracite and rail- 
roading, 105 

American standard of living, 
144 

Anthracite and monopoly, 21 

Anthracite and the govern- 
ment, 221 

Anthracite bookkeeping and 
wages, 130 

Anthracite carriers and govern- 
ment authority, 222 

Anthracite carriers, dividends 
paid by, 168, 197 

Anthracite carriers, profits of, 
in recent years, 171 

Anthracite carriers, stock rat- 
ings of, 169 

Anthracite combination, activ- 
ities of, 158 

Anthracite combination and 
prices, 93 

Anthracite combination and 
railroad unity, 58 

Anthracite combination, com- 
munity of interest estab- 
lished, 59 

Anthracite combination, data 
on, 50 

Anthracite combination, elimi- 
nation of independent opera- 
tors, 60 

Anthracite combination, ex- 
tent of, 49 

Anthracite combination in 
early years, 50 

Anthracite combination in 
1873, 51 

Anthracite combination in 
1876, 51 

Anthracite combination, inter- 
locking directorates and, 60 



Anthracite combination, net 
results of, 196 

Anthracite combination, organ- 
ization of, 55 

Anthracite combination, power 
of, 64 

Anthracite combination, rea- 
sons for, 54 

Anthracite combination, rea- 
sons for organizing, 56 

Anthracite combination, recent 
developments of, 55 

Anthracite combination, re- 
sults of, 159 

Anthracite combination since 
1898, 54 

Anthracite combination, suc- 
cess of, 157 

Anthracite combination, use 
of Lehigh Valby in, 58 

Anthracite consumers, obliga- 
tions of, 84 

Anthracite consumers, rights 
of, 84 _ 

Anthracite, cost of marketing, 
92 

Anthracite, cost of producing, 
87 

Anthracite, cost of producing, 
illustration, 88 

Anthracite, cost of production, 
specific items in, 88 

Anthracite costs, distribution 
of, 91 

Anthracite dividends, 160 

Anthracite earnings, 167 

Anthracite, extent of consump- 
tion, 45 

Anthracite freight rates, 164 

Anthracite, importance of, 144 

Anthracite, importance of, to 
consumers, 66 



(245) 



246 



INDEX 



Anthracite industry, relation 
to consumers, 46 

Anthracite interests, conflict 
of, 227 

Anthracite labor, conditions 
surrounding, 107 

Anthracite labor, economic 
status of, 97 

Anthracite labor, risks of, 103 

Anthracite monopoly, basis 
for, 21 

Anthracite monopoly, basis of, 
49 

Anthracite monopoly, char- 
acter of, 49 

Anthracite monopoly, larger 
results of, 201 

Anthracite, monopoly lesson 
of, 196 

Anthracite owners, status of, 
230 

Anthracite prices and the con- 
sumer, 197 

Anthracite prices, recent move- 
ments of, 85 

Anthracite problem, charac- 
teristics of, 43 

Anthracite problem, parties to, 
42 

Anthracite problem, statement 
of, 42 

Anthracite problem, summary 
of, 63 

Anthracite, production of, 44 

Anthracite production, restric- 
tion of, 52 

Anthracite profits, 153 

Anthracite profits and land 
values, 173 

Anthracite profits and railroad 

{;• profits, 161 

Anthracite profits, basis for 
determining reasonableness 
of, 171 

Anthracite profits, increase of, 
156 

Anthracite profits in recent 
years, 161 



Anthracite profits, measure of, 

170 
Anthracite profits, reasonable 

basis for, 177 
Anthracite prosperity, 160 
Anthracite, relative prices of, 

since 1890, 86 
Anthracite transportation, pro- 
fits from, 156 
Anthracite supply, duration of, 

48 
Anthracite, supply of, 46 
Anthracite, use of, 43 
Anthracite wage, business as- 
pects of, 128 
Anthracite wage, inadequacy 

of, 137 
Anthracite wages and income, 

135 
Anthracite wages and living 

decency, 27 
Anthracite wages and railroad 

wages, 106 
Anthracite wages and physical 

efficiency, 118 
Anthracite wages and the cost 

of living, 141 
Anthracite wages and the labor 

market, 110 
Anthracite wage scale, 115 
Anthracite wages, increase of, 

145 
Anthracite wage, social objec- 
tions to, 137 
Anthracite workers, demands 

of, 232 
Anthracite workers, status of, 

231 
Anthracite workers, wage rates 

of, 197 
Anti-trust agitation, 24 
Average annual earnings and 

real wages, 151 
Average earnings, anthracite 

labor, 101 
Average earnings, bituminous 

miners, 102 



INDEX 



247 



Business for profits, 76 
Business for service, 79 
Business practice and anthra- 
cite wages, 129 

Capital and investment re- 
turns, 77 

Capitalization, methods of, 78 

City land values and monop- 
oly, 20 

Classified earnings, anthracite, 
116 

Co-operation, growth of , 156 

Co-operation, growth of, in 
business, 26 

Combination and monopoly 
profits, 18 

Combination and the con- 
sumer, 27 

Combination, development of, 
27 

Combination, effect on prices, 
53 

Combination, effects of, on 
prices, 18 

Combination, reasons for, 26 

Competition and business ex- 
perience, 25 

Competition and cost prices, 
17 

Competition and group con- 
sciousness, 154 

Competition and prices, 26 

Competition and the con- 
sumer, 26 

Competition as the life of 
trade, 24 

Competition, danger of an- 
thracite, 57 

Competition, dangers of, 26 

Competition, decrease of, 27 

Competition, disasters of, 26 

Competition, historic basis of, 
25 

Competition, lessons of, in the 
anthracite field, 54 

Competitive price level, 28 

Consumer and low prices, 74 



Consumer and production, 67 
Consumer, obligations of, 70 
Consumer, position of, 1912, 

184 
Consumer, responsibilities of, 

68 
Consumer, rights of, 69 
Consumer, status of, 66, 235 
Consumer, viewpoint of/65 
Consumers and competition, 26 
Consumers and the burden of 

monopoly, 199 
Consumers, demands of, 236 
Consumers, increased burden 

on, 1912,187 
Consuming/public and individ- 
ual consumers, 65 
Consuming public, rights of, 65 
Cost of living and anthracite 

wages, 141 
Cost of living, increase in, 142 
Cost of living, scope of, 142 
Cost of marketing anthracite, 

92 
Cost of producing anthracite, 

87 
Cost price, meaning of, 17 
Cost prices and physical 

assets, 28 

Democracy and special privi- 
lege, 220 

Democracy, basic principles of, 
228 

Distribution, ownership as an 
element in, 23 

Dividends, anthracite, 169 

Dividend rates, anthracite, 97 

Earning power and prices, 82 

Earnings of anthracite miners, 
145 

Economic conflict and anthra- 
cite, 42 

Employment, extent of, 190 

Fair anthracite wages, 152 
Fair prices for anthracite, 94 



248 



INDEX 



Family expenditures, 120 
Food costs, 121 
Free land and monopoly, 36 
Freight rates, anthracite, 164 
Freight rates and anthracite 
profits, 162 

Government and anthracite, 
221 

Government regulation, rea- 
sons for failure of, 237 

Group consciousness, lack of, 
154 

Income and anthracite wages, 
136 

Income from work and owner- 
ship, 211 

Incentive and private property, 
40 

Independent operators, con- 
trol of, through contracts, 62 

Independent operators, elimi- 
nation of, 60 

Index of real wages, 151 

Inequality, effects of monopoly 
on, 208 

Labor, anthracite, status of, 97 

Labor cost and prices, 179 

Labor costs, anthracite, 88 

Labor costs, increase of, and 
increased prices, 180 

Labor market and anthracite 
wages, 110 

Labor market and social obli- 
gations, 140 

Lackawanna Railroad, operat- 
ing statistics for, 131 

Land and production costs, 20 

Land monopoly, illustration of, 
20 

Land, monopoly of, 19 

Land ownership as monopoly, 
19 

Land problem and monopoly, 
20 

Land, social character of, 33 



Land values and anthracite 
profits, 174 

Land value increase, instances 
of, 35 

Lehigh and Wilkes-Barre Coal 
Co., statement of operations, 
130 

Lehigh Valley Railroad, operat- 
ing statistics of, 133 

Living on income, 213 

Living wage, elements in, 119 

Living wage for anthracite 
workers, 125 

Living wage, meaning of, 114 

Monopoly and anthracite, 21 
Monopoly and inequality, 208 
Monopoly and land owner- 
ship, 19, 20 
Monopoly and resource owner- 
ship, 205 
Monopoly and special privi- 
lege, 19 
Monopoly and work oppor- 
tunities, 202 
Monopoly, as taxing power, 

216 
Monopoly, control of, over 

livelihood, 209 
Monopoly, dangers of, 224 
Monopoly, definition of, 17 
Monopoly, economic effects of, 

201 
Monopoly, example of, 17 
Monopoly, failure of 225 
Monopoly, general aspects of, 

201 
Monopoly, larger menace of, 

200 
Monopoly, measure of results 

from, 41 
Monopoly and monopoly price, 

76 
Monopoly, nature of, 17 
Monopoly, not final, 41 
Monopoly of resources, power 

through, 19 
Monopoly, political effects, 216 



INDEX 



249 



Monopoly power, 19 
Monopoly power and increased 

prices, 185 
Monopoly power, character of, 

17 
Monopoly, power of, over the 

worker, 203 
Monopoly price, content of, 18 
Monopoly price, example of, 

75, 185 
Monopoly price, fixing of, 75 
Monopoly price, principle of, 

75 
Monopoly principle and an- 
thracite, 84 
Monopoly profits, basis for, 18 
Monopoly profits, redefined, 28 
Monopoly, social effects of, 207 
Monopoly, sources of, 17 
Monopoly, success of, 38 
Monopoly taxes and anthra- 
cite, 219 
Monopoly, test of, 29 
Monopoly, use of surplus labor 

in, 204 
Monopoly, will it work? 29 

Natural resource control, basis 

for, 229 
Natural resource monopoly 

and private capital, 43 
Natural resource monopoly 

and public controversy, 43 
Natural resource monopoly 

and public welfare, 64 

Operators, advantage of, 178 
Operators, gains of, 190 
Opportunity and American 

life, 31 
Opportunity, denial of, through 

monopoly, 214 
Opportunity through owner- 
ship, 31 
Ownership and distribution, 23 
Ownership, arguments in favor 

of, 32 
Ownership and income, 205 



Ownership and opportunity, 3 1 

Ownership and private mono- 
poly, 34 

Ownership and property in- 
come, 212 

Ownership concentration and 
monopoly, 23 

Ownership, concentration of, 
and monopoly, 38 

Ownership, results of, 34 

Percentage contracts, control 
of operators through, 62 

Physical efficiency and anthra- 
cite wages, 118, 127 

Physical valuation, and reason- 
able prices, 83 

Price increase and labor cost, 
181 

Price increase, 1912, reasons 
alleged for, 192 

Price increases, 1912, 183 

Price increases, reasons as- 
signed for, 183 

Price making, methods of, 74 

Prices and earning power, 82 

Prices and profits, 77, 179 

Prices and physical valua- 
tion, 83 

Prices, anthracite increase in, 
85 

Prices, effect of combination 
on, 53 

Private ownership in natural 
resources, 33 

Private property and oppor- 
tunity, 40 

Private property an incentive, 
40 

Private property, logic of, 39 

Private property, test of, 36 

Production costs and increased 
prices, 193 

Production costs, anthracite, 
192 

Production of anthracite, 44 

Purchasing power, over an- 
thracite, 197 



250 



INDEX 



Profits and prices, 77, 179 
Profits and the 1912 agree- 
ment, 191 
Profits, extent of, 199 
Profits in anthracite, 153 
Profits, increase of, 156 
Property and service income, 
210 

Railroad earnings, anthracite 

carriers, 167 
Railroad profits and anthracite 

profits, 161 
Railroad unity and anthracite 

combination, 58 
Reading interests and anthra- 
1 ' cite combination, 52 
Reading interests, organization 

of, 53 
Real wages, anthracite, 148 
Reasonable prices, 72 
Reasonable prices, consumer 

and, 73 
Reasonable prices, definition 

of, 73 
Reasonable prices, measure of, 

73 
Reasonable profits, basis for, 

78, 171 
Resource monopoly, complete- 
ness of, 21 
Resource monopoly, economic 

power of, 207 
Resource monopoly, success 

of, 38 
Resource ownership, arguments 

for, 32 
Resources and monopoly, 19 
Resources, private monopoly 

of, 31 
Risks of anthracite labor, 103 

Service and the business view- 
point, 80 
Sliding scale, results from, 182 
Small profits, era of, 153 
Social institutions and social 
values, 37 . 



Social success, measure of, 41 
Special privilege and American 

government, 220 
Special privilege and monop- 
oly, 19 > 
Special privilege, danger of, to 

democracy, 220 
Special privilege, taxing power 

of, 219 
Standard of living, 121 
Standard of living, cost of, 122 
Standard of living, cost of, for 

anthracite workers, 124 
Strike of 1912, lessons from, 

194 
Strike of 1912, results of, 178 
Surplus labor and monopoly 

power, 294 

Taxation, possibilities of, 238 

Taxing power and monopoly, 

.216 

Taxing power, growth of, 217 

Temple Iron Company and 
anthracite combination, 60 

Trade, advantages of competi- 
tion in, 24 

Trusts, public attitude toward, 
24 

Unmined anthracite, 47 

Wage adequacy, measure of, 

113 
Wage adequacy, phases of, 118 
Wage agreement, 1912, 182 _ 
Wage contract and social 

ethics, 139 
Wage increase and increased 

prices, 179 
Wage increase, anthracite, 146 
Wage increase 1912, extent of, 

189 
Wage rates, anthracite labor, 

100 
Wage rates in recent years, 197 
Wage scale, anthracite, 115 



INDEX 



251 



Wages and the labor market, 

ill 
Wages and the 1912 agree- 
1 ment, 188 
Wages, anthracite, adequacy 

of, 112 
Wages, anthracite, and other 

industries, 107 
Wages anthracite, and other 

mine wages, 99 
Wages, anthracite labor, 99 
Wages, anthracite, recent 

changes in, 117 
Wages, basis for determining, 

139 
Wages, increase in, 178 



Wages must support families, 
140 

Wages, Pennsylvania coal 
mines, 101 

Workers and owners, 211 

Workers, anthracite, possibili- 
ties for, 98 

Workers, benefits of monop- 
oly to, 200 

Workers, future status of, 132 

Workers, status of, 1912, 188 

Yearly earnings, anthracite 
and other industries, 108 

Yearly earnings, anthracite 
miners, 101 



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